Spam King In Spyware Truce with FTC

Alleged spyware kingpin Stanford Wallace has reached an agreement with the Federal Trade Commission (FTC). He’ll stop infecting computers with spyware until a pending federal lawsuit against him and his two companies, SmartBot.net of Richboro, Pa., and Seismic Entertainment Productions of Rochester, N.Y., is resolved. A trial date has not yet been set.

Neither business has a listed telephone number.

Under the terms of the agreement, Wallace’s companies can only send ads to surfers who visit his sites. In October, a U.S. District judge issued a temporary restraining order preventing Wallace from sending ads. Hearings on that order were scheduled for this week, but canceled following the agreement with the FTC.

The FTC suit claims Wallace’s companies spread a spyware program that first infects users’ computers, then flashes ads asking them to pay $30 to purchase programs to halt the infection. The FTC says this is a deceptive business practice. It wants the firms shut down, and wants Wallace to reimburse consumers.

Spyware remains legal in the United States.

In the ’90s, Wallace ran Cyber Promotions, a company that sent up to 30 million spam messages per day. He left in the wake of lawsuits filed by America Online and EarthLink against the company.

In October, a statement on Wallace’s Web site read: “We believe the U.S. government is attempting to enforce federal laws that have yet to be enacted. We feel this is a political move and it is being made at the expense of legal business operations. I am not surprised at all that my companies and I, Sanford Wallace, were picked as the ‘poster boy.’ I find the timing and target of this action to be extremely convenient and painfully obvious. We deny any wrongdoings and plan to pursue all legal protections, remedies and freedoms.”