Companies accused of violating state’s spyware and consumer protection laws
SEATTLE – Attorney General Rob McKenna today announced a settlement with two New York-based companies accused of violating Washington state's consumer protection and computer spyware laws. The settlement resolves allegations that High Falls Media, Roc Telecommunications and their associates promoted a software program called Spyware Slayer through deceptive means, and that the defendants failed to disclose costs of a music download service until after consumers provided personal information.
The agreement provides restitution to Washington residents who purchased the products and request refunds. The Attorney General’s Office estimates than more than a hundred consumers may be eligible for reimbursement; some have already received refunds.
“The Attorney General’s Office will vigorously pursue Internet Age marketers who attempt to deceive or mislead consumers,” McKenna said, “but companies also have an important role to play in ensuring a fair marketplace.
“Internet businesses must do a better job of self-regulating and thoroughly evaluate their advertising and marketing methods to ensure they comply with the law. They need to fully disclose all terms and fees for their products and services and should not intentionally manipulate consumers’ fears about spyware and other online threats in order to boost sales,” he said.
The consent decree filed today in King County Superior Court concludes a six-month investigation by the Attorney General’s Consumer Protection High-Tech Unit. The state filed charges against High Falls Media LCC, of Hilton; Roc Telecommunications LLC, of Rochester, and three company associates: Thomas M. Tortora, Mark Libutti and Brian Einhaus, who live in New York and are affiliated with both companies.
The defendants cooperated with the Attorney General’s investigation and were responsive to concerns raised by the office. They did not admit any fault as part of the agreement, but agreed to pay $300,000 in civil penalties, with all but $25,000 suspended on compliance with the settlement terms. They will also pay $30,000 in attorneys’ costs and fees.
In addition, the defendants must send an e-mail to prior Washington customers who purchased Spyware Slayer or music download software during the past two years via any of its Web sites including 247downloads.com, freedownloadclub.com, downloadsforever.com, freepcscan.com and mp3sunlimited.com. Consumers who have not already received refunds may request reimbursement.
The settlement does not include any specific findings of wrongdoing. The state’s complaint filed simultaneously alleged a variety of violations of the state Computer Spyware Act and Consumer Protection Act.
According to the Attorney General’s Office’s suit, High Falls promoted Spyware Slayer software on its Web site, freepcscan.com. The site warned consumers that there is a “90% chance” their computers are infected with spyware and urged them to perform a “free scan” of their computer.
If a consumer tried to close out of the site, a pop-up ad appeared that stated: “Warning – We have detected a 99% chance that you are infected. If you leave now, damage could be done by harmful worms, viruses, adware, spyware, malware or hacker code.”
If a consumer elected to have the free scan performed, a software program downloaded onto the user’s computer.
“Our investigation found that this so-called ‘free scan’ always detected spyware labeled as ‘extreme risk’ on a user’s computer,” said Assistant Attorney General Katherine Tassi, who spearheaded the state’s case.. “The scan also identified harmless registry keys as spyware. In order to remove this falsely detected spyware, users are advised to purchase the full version of Spyware Slayer for $29.95.”
McKenna said it is illegal under Washington’s Computer Spyware Act to induce consumers to download software under the guise that the program is needed to protect themselves and their computers.
The defendants also promote and sell several download services: 24/7 Downloads, a peer-to-peer music, movie, game and software download service; Free Download Club, which advertises ring-tones for cell phones, DVD burning software and other programs, and MP3s Unlimited.
Roc’s 24/7 site prominently featured a representation of the number of members online at any given moment and the total size of files being shared. In fact, the numbers represented on the Web site did not change according to the number of users or files available but instead repeated in a sequence each time a user clicked “refresh.”
Another site owned by Roc, mp3review.net, was advertised as free service to help consumers make choices about downloads. The site offers reviews of the best download sites. Defendants reviewed their own music download sites and gave them top ratings, but did not disclose they were the owners of those sites.
Some customers complained they did not receive promised files, were unable to access technical support, or did not receive refunds.
The settlement prohibits the defendants from misrepresenting the cost of its services and products, creating a false sense of urgency or need for a product, or collecting personal information from consumers without first disclosing product costs. It also prohibits them from failing to honor guarantees or respond to complaints or misrepresenting the objectivity or authorship of any review or assessment of their products or services written by the defendants.
At the time of the allegations, Tortora was responsible for all accountant duties associated with High Falls and Roc. He also was responsible for Web site content review and invoicing for Roc.
Einhaus was the head of High Falls’ information technology department and designed and developed the company’s software products and Web sites. He was also responsible for marketing, technical support and product orders for Roc.
Libutti was responsible for sales and marketing of both businesses.
Washington residents who believe they are eligible for a refund should monitor their e-mail for a message from the defendants. By clicking on the reply button, they will submit their request and receive a check from the defendants within 60 days.
Important note for consumers: The defendants already have contact information for consumers who are eligible for refunds. Unless you have recently moved and need to submit a new address, there is no reason to provide personal information in order to receive your refund. As a reminder, most requests for personal information are fraudulent and you should never provide personal information such as Social Security number, bank account or credit card number, or account access codes when replying to an e-mail.
Consumers who believe they are eligible for refunds may file a complaint with the Attorney General’s Office online at www.atg.wa.gov or call 1-800-551-4636 to request a form or additional information.
High Falls Media and Roc Telecommunications Complaint
High Falls Media and Roc Telecommunications Consent Decree
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Media Contacts: Kristin Alexander, Public Information Officer, (206) 464-6432
Katherine Tassi, Assistant Attorney General, (206) 389-3974