Page II: In what could prove to be one of the great second acts in Internet history, erstwhile king of spam Sanford Wallace takes centre stage this week as exhibit A in a federal crackdown on invasive online advertising software.
In an interview with CNET News.com in 2001, he outlined his strategy of boosting traffic by forcing people to click through multiple pop-up windows in order to exit his PassItOn.com entertainment site. He said he would soon start collecting personal information from people who wanted to use his site without so many windows.
"We don't violate anybody's privacy; everything is disclosed," Wallace said in that interview. "We're giving something away for free in exchange for consumers' permission to use private information. It's no secret. Publishers Clearing House has been doing this type of thing for years."
The FTC cited that interview in its lawsuit, which was filed in New Hampshire federal court last week. Wallace said the current incarnation of his Web sites did not collect any personal information about consumers at all.
In the lawsuit, FTC and independent investigators outline a string of what they say were potentially abusive practices.
FTC investigator Sallie Schools said Web sites operated by Wallace changed the home page in her Internet Explorer browser. Programming code on one page popped open the CD drive in her computer and showed text saying "If your CD-ROM drives open...You desperately need to rid your system of spyware pop-ups immediately." The site then offered a product called Spy Deleter.
Other sites surreptitiously downloaded software from another company's site, which in turn led to the installation of numerous other spyware and advertising programs, the lawsuit charged. All of the actions took advantage of publicised security holes in Microsoft's Internet Explorer browser.
Anti-spyware activists say a successful case focusing on these practices -- changing home pages without consent, installing software without consent and "compelling" the purchase of anti-spyware software -- will help clamp down on some of the worst practices online.
"We're very positive about the way this is looking; it looks like they've built a good case," said Ari Schwartz, associate director of the Center for Democracy and Technology, which first brought Wallace's company to the attention of the FTC. "This fits into the kinds of cases where the FTC could get their feet wet on this issue."
Wallace said he would pursue the case and pull down the sites if a judge ruled against him.
"We want to confirm that our model is legal," Wallace said. "If the court finds that it's either illegal or deceptive or unfair, by the FTC's definition, we will cease operations voluntarily."
As the FTC moves ahead with its more aggressive strategy, Congress remains close to passing legislation that would boost fines for spyware purveyors and potentially impose criminal penalties.
The House of Representatives passed two separate bills last week aimed at the practice. Major technology companies, including Microsoft, Yahoo and Dell, have signed on to the idea after some trepidation, though some technology executives privately say they are still worried about provisions focusing on types of technology rather than on the behaviour of potential "bad actors."
Some insiders say the pending bills are likely to be joined, providing both criminal penalties and higher civil fines, and passed when Congress returns to Capitol Hill after Election Day.
The issue has been a strong focus for several legislators, including House Commerce Committee Chairman Joe Barton (Republican, Texas).
"Spyware is to computers what an open window is to burglars," Barton said last week, following the passage of a bill authored by Rep. Mary Bono (Republican, California). "This will provide some real, sorely needed online protection for consumers."
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