FTC Alert on InternetALERT

You can’t lose two pounds a week without dieting or turn a bald head hairy — and it’s not so easy to significantly reduce the risk of Internet attacks.

The Federal Trade Commission said it agreed to settle false advertising charges with Bonzi Software, a company that makes anti-phishing and virus protection software. The company, which also operates an affiliate marketing portal, has agreed to tone down its claims and offer existing customers a partial refund.

The FTC complained that online ads for Bonzi’s InternetALERT touted protection it couldn’t deliver. Bonzi advertised the $49-per-year product through banner, button, and pop-up ads and on the company’s Web site. Without InternetALERT, the ads warned, hackers can “Steal your Credit Card & Personal Information; Read Your E-Mail; Plant a Virus or Worm; or Steal Online Banking Information!”

Bonzi promised that InternetALERT could provide consumers with the “comfort and security of knowing that no one from the Internet can access [their] computer[s] without [their] knowledge or permission!”

But the FTC charged that the software does not significantly reduce the risk of unauthorized access into computers and information stored in them and provides only limited protection for computers against intrusions by hackers, viruses, worms, spyware, and other Internet threats. Meanwhile, it completely lacked virus protection and a block on unauthorized outgoing file transfers.

The proposed agreement, which may be finalized or amended based on public comment, bars Bonzi from overstating how much any software can detect and reduce the risk of Internet attacks or enhance security or privacy. Bonzi would have to notify current InternetALERT subscribers and let them cancel their service and receive a prorated refund. They also would have to send a copy of the order to third parties advertising or selling InternetALERT.

Bonzi should know the drill by now.

In February, the San Luis Obispo, Calif.-based company agreed to settle FTC charges that, along with UMG Recordings, it violated the Children’s Online Privacy Protection Act (COPPA) for $75,000. According to the FTC, Bonzi’s BonziBUDDY knowingly collected extensive personal information from children under the age of 13 — including their birth dates, which made the knowingly part a slam-dunk.

In 2003, the company settled a consumer class action suit over Bonzi Buddy, a “surfing companion” that suggested sites to visit. The suit claimed Bonzi tricked users into visiting its portal by running pop-up ads that mimicked the Windows messenger feature with “message alert,” security alert,” or “warning.” When users clicked okay, instead of closing the box, they were taken to Bonzi’s promotional site. Bonzi paid $170,000 attorneys’ fees and agreed to stop running misleading ads, but didn’t pay any damages.

Bonzi removed a feature from the software that saved the user’s keyword searches, and it no longer asks for personal information at registration.

Bonzi Software owners Jay and Joe Bonzi could not be reached for comment.

According to Nielsen//NetRatings, Bonzi was the No. 6 software advertiser online in April 2003, running 141.6 million impressions.

Thomas Pahl, a staff member if the FTC’s Bureau of Consumer Protection, said false or misleading Internet advertising is a growing trend. His organization has brought over 300 actions involving bogus claims on the Internet, although many of those actions involved advertisers using multiple media. He pointed out that the cost of making claims on the advertiser’s own Web site is much less than buying radio, TV or print spots.

“The Internet will grow as a means of commerce” he said. “There will be more and more Internet ads, and there will be more and more that raise concerns for us, because they may be false or misleading.”

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