New York attorney general Eliot Spitzer said yesterday he had sued software company Intermix Media for bundling hidden spyware along with million of programs it gave away for free.
The practice violates state laws that prohibit false advertising and deceptive business practices, Spitzer`s office said in a news release.
Intermix stock was down more than 20% at $3.81 at midday on the American Stock Exchange.
Spitzer`s office is seeking to stop Intermix from secretly installing software on users` computers, give back money it made from the process and pay a fine.
"These fraudulent programs foul machines, undermine productivity and in many cases frustrate consumers` efforts to remove them from their computers," Spitzer said in a statement.
Intermix, based in Los Angeles, operates several Web sites, among them http://mycoolscreen.com and http://www.flowgo.com, which allow users to download screen savers and games for free.
These programs were secretly bundled with others designed to deliver pop-up advertising or steer Web traffic to an Intermix search engine, Spitzer said.
Once installed on a computer, the software is difficult to dislodge, he said.
Internet users downloaded tens of millions of these programs, including 3.7 million in New York State, Spitzer said.
Intermix said it has earned $250 000 from New York state computer users.
The programs in question are no longer being distributed, the company said. Other Intermix programs, such as screensavers, can now be downloaded without advertising programs attached, a spokesperson said.
"Intermix does not promote or condone spyware, and remains committed to putting this legacy issue behind it as soon as practicable," Intermix corporate counsel Christopher Lipp said in a statement.
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