On Nov. 6, 2003, the FTC referred to D Squared’s business practice as a “pop-up spam scam.” Howard Beales, director of the FTC’s Bureau of Consumer Protection, said: “This is nothing more than a high-tech version of a classic scam. The defendants created the problem that they proposed to solve – for a fee. Their pop-up spam wasted computer users’ time and caused them needless frustration.”
According to the Associated Press, D Squared claimed it could send pop-ups to as many as 135,000 Internet addresses each hour and had a database of 2 billion addresses. The intrusive pop-ups could be sent every 10 seconds.
The software D Squared sold to block the pop-ups it was bombarding users with cost up to $30.
The FTC dropped its civil suit against D Squared in exchange for the company agreeing to stop using the Windows Messenger Service to flood users with pop-ups. D Squared also agreed to halt selling its software that would block the pop-ups.
In addition, D Squared can no longer send online ads that do not provide users with an option not to receive them. The FTC is also going to monitor D Squared through 2009.
D Squared was established by two University of California in San Diego students, Anish Dhingra and Jeffrey Davis. Under the terms of the settlement, Dhingra and Davis did not have to admit wrongdoing and will not face prison time.
In related Federal Trade Commission news, FTC Chairman Timothy Muris announced on Aug. 2 that he is resigning, effective Aug. 15.
