Spyware Hustler Hit With $4M Penalty

Justice was finally downloaded Thursday on Sanford Wallace, a notorious
spammer of the 1990s who moved on to illegal spyware operations that
installed adware, spyware and other unsolicited software programs on users’
computers.

A New Hampshire federal district court ordered Wallace and his company,
Smartbot.Net, to pay more than $4 million in restitution, and it permanently
barred Wallace from downloading any software to consumers ‘computer without
the users’ consent.

In a related action against OptinTrade and Jared Lansky, the court ordered a
halt to the same practices that are barred in the Wallace and Smartbot.Net
judgment.

Lansky, an ad broker who distributed ads containing Wallace’s
spyware, will pay $227,000 in restitution.

Wallace was at the center of the Federal Trade Commission’s (FTC) first
spyware case in October
2004.

The FTC sued both Wallace and Lansky, claiming that their secret downloads
of spyware were unfair, deceptive and violated federal law.

Although Wallace and Lansky used different techniques to direct customers to
their sites, the FTC alleged that both operations hijacked consumers’
computers without their knowledge or approval, secretly changing
their settings and bombarding them with pop-up ads.

After the spyware was installed without consent, users’ were informed that
their machines were infected and therefore needed anti-spyware software.

Spy Wiper and
Spy Deleter, the purported anti-spyware products the defendants promoted,
sold for $30.

In an unrelated case, the FTC also announced it was charging Odysseus
Marketing and its principal, Walter Rines, with luring consumers to their
Web site by advertising bogus software they claimed would allow consumers to
engage in anonymous peer-to-peer (P2P) file sharing.

According to the FTC, the spyware and other software bundled with it
hijacked search engines and reformatted search engine results, placing Rines’s clients first.

The FTC charged that Rines and Odysseus
distributed their spyware by exploiting security vulnerabilities in
Microsoft’s Internet Explorer.

The FTC claims that Rines and Odysseus captured consumers’ personal
information, including their names, addresses, e-mail addresses, telephone
numbers, Internet browsing and shopping history and information about their
online transactions.

According to the FTC complaint, once the data was captured, the information
was sent to Odysseus’ servers to be compiled into a database. The FTC claims
Odysseus and Rines attempted to sell the stolen data.