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FTC Attacks Spyware Marketers Exploiting Flaws in Internet Explorer

CONCORD, N.H. — The Federal Trade Commission has been granted a temporary restraining order against several software companies based in New Hampshire and Pennsylvania that allegedly infected computers with spyware and then tried to sell surfers the solution.

The FTC’s complaint in U.S. District Court cited as defendants Seismic Entertainment Productions Inc., SmartBot.Net Inc. and Sanford Wallace, who is president and owner of Seismic and SmartBot.

Regulators accused the companies of showering computer screens with pop-up ads after secretly infecting them and then trying to get consumers to buy “spy wiper” or “spy deleter” for $30.

The companies, according to the complaint, exploited a number of vulnerabilities in the 5.01, 5.5 and 6.0 versions of the Microsoft Internet Explorer web browser to reconfigure consumers’ computers by installing software code onto their computers without their knowledge or authorization.

Once the spyware is downloaded to computers from the companies’ websites, the FTC said, it causes a debilitating sequence of events to occur.

The programs that the spyware installs include Favoriteman, TrojanDownloader, WinFetcher, VX2 and Clearsearch, among others.

“First the spyware replaces the web browser’s default homepage with a different web page, www.default-homepage-network.com,” the FTC said in a brief. “Upon visiting the web page, the computer screen is peppered with a cascade of pop-up advertisements, including ads that cover the entire screen and promote adult entertainment websites.”

The defendants also made money from affiliate programs based on the number of downloads and installs they induced, according to the FTC.

According to an affiliate program offered by Mailwiper Inc., the company that sold Spy Deleter and Spy Wiper received 45 percent of the purchase price, or $13.50.

The FTC’s complaint alleged that Wallace, acting either individually or in concert with others, “formulated, directed, controlled, or participated in the acts and practices of Seismic and SmartBot” in violation of FTC Act §5.

Regulators are attempting to seek a permanent injunction against the companies, as well as rescission of contracts, restitution and the disgorgement of ill-gotten gains.

The case is Federal Trade Commission vs. Seismic Entertainment Productions Inc., (no court docket number available).

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