New York Attorney General Eliot Spitzer

US company Intermix Media, which has caused much hassle for computer users both in the United States and overseas, said today it has agreed to pay $7.5 million over three years to settle a lawsuit brought by New York Attorney General Eliot Spitzer, which accused the company of surreptitiously installing software on computers.

Intermix had hijacked thousands of computers by installing "spyware" and "adware" programs  without users knowledge.

Intermix said it had reached ''an agreement in principle'' and expects to formalize a settlement within the next few weeks.

However, a spokesman for Spitzer Brad Maione said Wednesday that there was no agreement and that the investigation and negotiations with Intermix continue.

Spitzer filed the civil suit last April as part of a campaign against the fraudulent or nuisance-filled applications that he has said hurt Internet commerce. Spitzer charged Intermix with secretly installing ''adware'' -- software that delivers pop-up advertisements or similar promotions.

Intermix said today under the terms of the settlement in principle, the Company would pay a total of $7.5 million over three years to the State of New York, and would permanently discontinue distribution of its adware, redirect and toolbar programs, all of which Intermix has previously and voluntarily ceased distributing. Intermix emphasized that it has not admitted any wrongdoing or liability and expects the final agreement to reflect this fact.

"We are pleased to announce an agreement in principle that should allow for an amicable resolution of this matter," said Richard Rosenblatt, chief executive officer of Intermix. "Our mandate was to remove this obstacle to the Company's continued upward trend and to place this legacy business and related issues behind us."

Since the initial inquiry by the Attorney General's Office, Intermix has:

• Created the position of Chief Privacy Officer and is recruiting and evaluating final candidates; and
• Joined the Network Advertising Initiative (NAI), which has worked with the Federal Trade Commission and U.S. Department of Commerce to develop a self-regulatory regime to protect the Internet consumer and, simultaneously, the viability of Internet technology.

"Persistent consumer concerns about online marketing require constant vigilance in today's internet marketplace," said Trevor Hughes, executive director of the NAI. "We look forward to Intermix's participation in the NAI as we continue to forge industry best practices that preserve online advertising while respecting consumers."

As previously indicated by the Company, distribution of downloadable applications has not been central to current management's vision for the future of Intermix and was not material to the Company's fiscal year 2006 forecasts.

Nice pious words but no apology for the company's disreputable actions that have cost thousands of people both time and money.

"As a leader in new media, we are dedicated to cultivating a reputation for forging best practices in an industry where standards evolve and change rapidly," said Rosenblatt.

Intermix operates web sites featuring quizzes, games and jokes that it packages for advertisers.

Background

Last April, New York Attorney General Eliot Spitzer sued one of America's leading internet marketing companies, alleging that the firm was the source of "spyware" and "adware" that has been secretly installed on millions of home computers.

The suit against Los Angeles-based Intermix Media, Inc. is the most sweeping case to date involving programs that redirect web addresses, add toolbars and deliver pop-up ads.

"Spyware and adware are more than an annoyance," Spitzer said. "These fraudulent programs foul machines, undermine productivity and in many cases frustrate consumers' efforts to remove them from their computers. These issues can serve to be a hindrance to the growth of e-commerce."

Ari Schwartz, the Associate Director of the Center for Democracy and Technology in Washington D.C. said, "One of Internet users' biggest frustrations today is unwanted software that sneaks onto computers without their owner's consent and cannot be uninstalled. Companies have gotten away with unethical and illegal software download practices for too long. The practices alleged in this case are widespread on the Internet and we hope that both federal and state authorities follow Attorney General Spitzer's lead in making this a priority, "

Spyware is a term used to describe software programs that are secretly deposited on computers to track Internet usage, launch advertising programs or steal users' personal information. Among the most popular of these programs are adware, keystroke loggers and so-called system monitors.

Webroot Software, a provider of anti-spyware software and other security technologies for consumers and enterprises, today released the anti-spyware industry's first comprehensive report on spyware, The State of Spyware Report, an in-depth review and analysis of the impact of spyware, adware and unwanted software on consumers and enterprises.

Included in the report is concise data of the pervasiveness of adware and the rise of system monitors throughout 2004 and for the first quarter of 2005. The report indicates that the spyware industry is generating billions of dollars in annual revenue and now represents a substantial portion of overall online advertising spending.

The report also reveals that an exceedingly high number of consumer computers are infected by some form of spyware and chronicles the top spyware threats currently in the wild, as well as the growing number of web sites and pages that host spyware. Also detailed are some of the most notorious incidents of spyware, as well as a full account of various legislative efforts to curtail the growing scourge.

"To combat spyware effectively, the anti-spyware industry must be fully informed about the origins of spyware, its growth path and the impact it has on consumers and businesses," said David Moll, CEO OF Webroot. "Our previous Quarterly Spy Audit Reports have provided a numerical analysis of spyware's growth, but our industry has been lacking a comprehensive resource that fully documents the spyware threat. The State of Spyware Report fills that void and delivers the most in-depth, expansive review and analysis of spyware to date."

Report Details Infection Rates and Top Threats

The foundation for much of the analysis and trends reporting comes from Webroot's consumer and corporate SpyAudit tools and from online research culled by Phileas, Webroot's automated spyware research system. The SpyAudit tools invite both consumers and enterprises to scan specific PCs and determine spyware infection levels.

In the first quarter of 2005, 88% of SpyAudit scans found some form of unwanted program (Trojan, system monitor, cookie or adware) on consumer computers. Research from the report also indicates that spyware -- pop-ups, hijacking home pages, redirecting searches, and using host file and DNS poisoning- generates an estimated $2 billion in revenue annually. These numbers indicate that this previously unmeasured market may be approaching 25% of the already established market of online advertising as reported by the Internet Advertising Bureau.

In addition to a full review and analysis of the spyware threat in general, Webroot's State of Spyware Report individually lists the 10 most significant emerging spyware and adware threats based on detection, as well as potential impact. CoolWebSearch, an infamous piece of adware with over 100 differents variants and a reputation for stymieing many anti-spyware programs, was dubbed the top threat.

The report also offers an up-to-date review of the legislative actions surrounding spyware, listing pending legislation at both the federal and state levels.

Top Spyware Incidents Chronicle Financial Motivation

The report also examines recent incidents of real spyware exploits that have crippled some enterprises, including the attempted multi-million dollar theft from a major international financial institution, by a hacker using a planted keylogger.

"Attacks on financial institutions are just one example of the devastating damage spyware can inflict in a corporate environment," said Richard Stiennon, Webroot's vice president of Threat Research. "Our research shows that some form of spyware, adware or potentially unwanted software can be found on 87% of corporate PCs. This figure is disconcerting from a security perspective and also from an IT support perspective, as spyware can often slow down the performance of an entire network."