New York again sues alleged spyware corporation

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New York state Attorney General Eliot Spitzer is going after internet fraudsters again, this time suing a Manhattan spyware company for allegedly installing millions of pop-up advertisements on customers’ PCs.

Spitzer on Tuesday announced a lawsuit against Direct Revenue, accusing the online media company of installing advertising software, known as drive-by-downloads, on computers without properly notifying customers.

The suit seeks a court order prohibiting the company from secret installations and forcing it to provide an accounting of its revenues, according to a statement released by Spitzer's office. The suit – which names the company's founders and chief officers as defendants – also asks the court to fine the company.

"We will continue to side with consumers in their fight for control of their desktops," Spitzer said.

Direct Revenue, meanwhile, denied any wrongdoing, according to a statement posted Tuesday on its website. The company said it has not employed any questionable practices in at least six months and that it has no plans to change the way it is run.

"This lawsuit is a baseless attempt by the Office of the Attorney General to rewrite the rules of the adware business," read the statement. "It focuses exclusively on the company's past practices – practices we and other industry leaders changed long ago – and says not a word about what we're doing today."

The attorney general's office said it documented cases in which the company promised free applications, such as games or browser enhancement features, but did not mention spyware would accompany the downloaded applications.

The investigation also showed the spyware was difficult to detect and remove, and it often reinstalled itself following removal.

"Surreptitiously installed spyware and adware harm consumers and businesses, and my office will continue to prosecute these practices aggressively," said Spitzer. "These applications are deceptive and unfair to customers, bad for businesses that rely on efficient networks to do their jobs and bad for online retailers that need consumers to trust and enjoy their online experience."

Direct Revenue refuted those allegations, saying it requests customer consent before offering any downloads and provides easy removal for software.

"Mislabeling our products as spyware does a disservice not only to our company, but also to the public by creating an atmosphere of hysteria, confusion and inaccuracy," the company spokesman said.

This is the second time in less than a month that Spitzer has accused an internet company of duping customers.

In late March, the attorney general sued Washington, D.C.-based Gratis Internet, alleging the company sold personal information obtained from millions of customers, despite a promise of confidentiality.

Earlier that month, Datran Media, a Manhattan email marketer that purchased personal information from Gratis, agreed to pay New York state $1.1 million following a settlement.

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