FTC v. Odysseus Marketing

Citation: Federal Trade Comm'n v. Seismic Entertainment, Inc., No. 04-377-JD, 2004 U.S. Dist. LEXIS 22788(D.N.H. Mar. 22, 2006), available at http://www.ftc.gov/os/caselist/0423142/0423142.shtm.

Factual Background
In October 2005, the Federal Trade Commission (FTC) charged that Odysseus Marketing, Inc. and its principal, Walter Rines, lured consumers to their websites by advertising bogus free software, including a program called Kazanon that purportedly allowed consumers to engage in anonymous, peer-to-peer file sharing. According to the complaint, the bogus software was bundled with spyware and other unwanted software.

The agency alleged that the defendants also distributed their spyware by exploiting security vulnerabilities in the Internet Explorer Web browser. The FTC charged that the defendants’ spyware intercepted and replaced search results provided to users who queried popular Internet search engines, and barraged consumers with pop-up and other Internet ads. The FTC also charged that the defendants’ software captured consumers’ personal information such as their first and last names, addresses, e-mail addresses, telephone numbers, and Internet browsing and shopping histories, and transmitted that information to the defendants’ Internet servers. Consumers were unable to locate or uninstall the defendants’ spyware through reasonable means, according to the FTC.

District Court Decision
The court ordered a preliminary halt to the practices pending trail.

Settlement and Consent Decree
The parties agreed to a settlement that bars Odysseus Marketing and Rines from exploiting any security vulnerability to download or install software. It requires the defendants to obtain consumers’ express consent before downloading any software onto their computers and bars them from installing software that cannot be readily uninstalled. It also prohibits the defendants from redirecting consumers’ computers to sites or servers other than those the consumers selected to visit; from changing any Web browser’s default home page; and from modifying or replacing the search features or functions of any search engine.

The settlement further prohibits the defendants from making deceptive representations &mdash; including misrepresenting that their software program will make peer-to-peer file sharing programs anonymous &mdash; and bars them from misrepresenting the benefits, efficacy, performance, cost, or features of any software program. The settlement also requires the defendants to destroy the personal information they previously collected and prohibits them from collecting or disclosing personal information in the future unless they have consumers’ express consent.

The settlement requires Rines to obtain a $500,000 performance bond before downloading or installing software that causes the display of ads, modifies Web browsers or operating systems, or collects personal information. Finally, the settlement imposes a $1.75 million judgment, of which all but $10,000 is suspended based on the defendants’ inability to pay. Should the court find that the defendants misrepresented their financial condition, the entire $1.75 million will become due.