SEATTLE – The Washington State Attorney General’s Office announced a settlement today with Sammamish-based SoftwareOnline.com, Inc. Under the settlement filed today in King County Superior Court, the company will refund affected consumers and pay $190,000 to resolve allegations that it misrepresented the extent to which its software is necessary for security, bombarded potential customers with pop-up ads and used deceptive billing practices.
“Consumers have the right to control their computers and not be subjected to alarmist deceptive advertising,” said Assistant Attorney General Katherine Tassi, lead attorney on the case.
“SoftwareOnline misrepresented the extent to which its InternetShield and Registry Cleaner products are necessary to prevent attacks from malicious Web sites and computers crashes. The company then sold consumers programs they claim will protect them from such hazards,” Tassi said. “SoftwareOnline also used billing practices intended to sell its products without a buyer’s explicit consent.”
Today’s settlement is the result of a four-month investigation by the Consumer Protection Division’s High-Tech Fraud Unit. Tassi said SoftwareOnline began making changes to its business practices as soon as the company was alerted to concerns by the Attorney General’s Office.
By agreeing to the settlement, SoftwareOnline.com, Inc., and its chief technology officer David W. Plummer, of Redmond, admit multiple violations of the state Consumer Protection Act. Specifically: 1) inducing computers users to download and purchase its products by making false claims that the computer is at risk; 2) transmitting software that generates multiple advertisements; 3) offering an uninstall option that did not remove all the software, and 4) engaging in "negative option billing,” resulting in consumers being billed for items they did not affirmatively request.
The defendants agreed to pay $400,000 in civil penalties, with $250,000 suspended on condition of compliance with all terms in the settlement. They must also refund consumers who have filed complaints and pay $40,000 in attorneys’ costs and fees.
The settlement terms prohibit the defendants from engaging in the following practices:
Inducing computer users to install software by misrepresenting that the user's computer is at risk for crashes or privacy and security invasions.
Marketing its InternetShield software by means of a “free scan.”
Using “buttons” in its advertisements that do not function as the user would expect them. For example, the X found in the corner of a window is normally associated with closing the window and should not open another ad.
Installing software on a user’s computer that causes multiple pop-up advertisements when the user tries to close out of advertisements.
Failing to provide a functional uninstall option for removing all software files.
Failing to obtain a consumer’s explicit consent to purchase a product or a service.
SoftwareOnline develops and sells products including InternetShield and Registry Cleaner. Defendants represent InternetShield as a security and privacy program that protects the user from attacks from so-called dangerous Web sites and Registry Cleaner as a program that will clean a computer’s registry in order to protect it from crashes, freezes and slow performance.
The company has marketed its products through pop-up ads and unsolicited e-mails that offer a “free scan” of the computer. If a user elected to have the free scan performed, a software program downloaded, installed, and executed on the user’s computer.
“ Once the free scans were installed, consumers were trapped in a labyrinth of advertisements to purchase an upgrade,” Tassi said. “Each new advertisement increased the consumer’s sense of fear, repeatedly warning of threats the computer faced if the user didn't purchase the product. In some instances, the ads kept coming until the free scan software was uninstalled or the consumer purchased the product. But the uninstall option didn’t always work properly and parts of the software remained on the computer.”
The state’s investigation found that after a user ran the InternetShield free scan, the free version offered to protect the user from 20 vulnerabilities. Users were repeatedly urged through pop-up ads and dialogue boxes to purchase the full program for up to $29.95 in order to be protected from another 2,000-plus “exposed Web sites.” Rather than identifying risks specific to the user’s computer, the scan found every computer to be at a security and privacy risk if it did not have those specific 2000-plus sites listed in the Internet Explorer browser’s Restricted Zone.
Similarly, Registry Cleaner provided a free scan, offered to “clean” 20 errors at no charge, and indicated that the consumer must purchase the full program to fix remaining problems.
The investigation also found that the company tacked additional products and services to the final check-out form and required customers to specifically decline the purchases to avoid being billed for them.
When consumers prepared to purchase a product, additional services and products including a $9.95 back-up disc and $4.95 ‘optional extended service’ plan appeared on the check-out form. The form also listed “one free year of updates” – selected by default – but the company was then authorized to automatically charge a consumer’s credit card at the end of the year unless the buyer cancels the update plan.
According to the settlement, SoftwareOnline will provide refunds to consumers who have filed complaints or refund requests with the company, the Attorney General’s Office, the Better Business Bureau or the Federal Trade Commission. Affected consumers have until August 9, 2006, to file a refund request.
Consumers who purchased InternetShield or Registry Cleaner may request a refund by filing a complaint with the Attorney General’s Office online at www.atg.wa.gov or call 1-800-551-4636 to request a complaint form.
SoftwareOnline.com Stipulated Judgment & Order
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Kristin Alexander, Public Information Officer, Attorney General’s Office, (206) 464-6432, firstname.lastname@example.org