Markets Wired

A federal court has held three Internet pagejackers in contempt and ordered them to return more than $555,,000 in ill-gotten gains for flouting a previous court order that barred them from deceptive business practices.

At the request of the Federal Trade Commission, the U.S. District Court for the District of New Hampshire has ordered defendants Sanford Wallace, Walter Rines, and Online Turbo Merchant, Inc. to return money that they made by violating a previous court order and collecting personal information about Internet users without their consent. According to the FTC, the operation targeted users of MySpace.com, diverting them to different Web sites and then bombarding them with ads to earn advertising commissions. The agency charged that the defendants subjected MySpace users to “phishing,” “pagejacking,” and “mousetrapping” scams.

The FTC’s complaint charged that the defendants obtained personal information about MySpace users without their consent by sending deceptive “phishing” messages that appeared to be from MySpace or other MySpace users; redirected users to Web sites other than those they chose to visit by “pagejacking” them to Web sites displaying advertisements; and modified and disabled users’ Web-browser navigation controls, a practice known as “mousetrapping”that allows scammers to take charge of which sites consumers visit.

The previous court order was part of a settlement reached with the FTC in October 2006 that prohibited Rines and others acting in concert with him from collecting personal information from Internet users without their advance consent. In the action announced today, the court ruled that Rines, Wallace, and Rines’s firm, Online Turbo Merchant, violated that provision. The court granted the FTC’s request to hold Rines’s business partner Wallace in contempt because, although Wallace was not part of the 2006 settlement, he had notice of the order and helped Rines collect personal information online without users’ prior consent, in violation of the order. The court held that Rines also violated a separate provision in the order that required him to post a $500,000 performance bond before downloading or installing computer code or other content that causes the display of ads or collects personal information.

In its original complaint, filed in October 2005, the FTC charged Odysseus Marketing, and its principal, Rines, with luring consumers to their Web site by offering free software,
including a program that supposedly allowed them to engage in anonymous peer-to-peer file sharing. According to the FTC, the bogus software was bundled with spyware that intercepted and replaced search results and barraged consumers’ computers with pop-up ads. The FTC alleged that the defendants’ software captured consumers’ personal information and transmitted the information to the defendants’ servers. Consumers were unable to locate or uninstall the spyware through reasonable means, the agency charged.

The FTC filed its motion asking the court to hold Rines, Wallace, and Online Turbo Merchant in contempt for targeting users of MySpace.com with another “phishing” scheme in January 2008.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,500 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s Web site provides free information on a variety of consumer topics.

(FTC File No.X050069; Civil Action No. 05-CV-330-SM)
(Odysseus.wpd)