The FTC filed a lawsuit in U.S. District Court, claiming the defendant - Digital Enterprises, which does business as Movieland.com - is violating federal law and must offer compensation to customers, according to an agency statement issued later Tuesday. A District Court judge has denied an FTC request to issue a temporary restraining order, and a trial to discuss the case's merits has yet to be scheduled.
The suit claims customers of Movieland.com downloaded software that enabled pop-up windows that barraged customers and could not be minimized or closed, the statement said. The ads, which claimed the customers never canceled their membership after a free three-day trial period, demanded $29.95 to end the pop-ups.
"Most (customers) claimed they had never signed up for the 'free trial,' never used Movieland's services and never even heard of Movieland until they got their first demand for payment.
But Digital Enterprises is denying any wrongdoing, according to its website. The site says the pop-ups are coming from a company "masquerading" as Digital Enterprises and Movieland. As a fix, the company suggests victims file a complaint with the FBI, ensure all Microsoft patches have been implemented on their PCs and download anti-adware software.
"Digital Enterprises and Communications has had nothing to do with this scam," the site says.
Washington state's attorney general filed suit against Movieland.com Monday under the Washington Computer Spyware and Consumer Protection acts. Also named in the suit is Digital Enterprises, as well as Alchemy Communications, AccessMedia Networks and Innovative Networks. Those same defendants are named in the FTC suit, in addition to Pacificon International, Triumphant Videos, Film Web, Binary Source, Mediacaster and CS Hotline.
The Washington suit is the product of a seven-month investigation conducted by the Attorney General's Consumer Protection High-Tech Unit. The suit claims that the pop-ups cannot be minimized and there is no easy way to remove the spyware that initiates them, as the software prevents users from using the Windows Control Panel to uninstall. Instead, the program launches a website that again presents payment options for the service.