Wednesday, December 19, 2007

EUR 1 mln fine for distributing undesired software

(Having gone between lectures of academics of the Academic Network Conference and jury laudationd of EUROPRIX Top Talent Award 2008 nominees, I am back into the real world).

The Dutch telecom watchdog OPTA has imposed a fine totalling EUR 1 million on three Dutch companies and their two directors, because they installed software on more than 22 million computers belonging to Internet users in the Netherlands and elsewhere. By unlawfully installing this so-called adware and spyware these small enterprises distributed advertising material and obtained access to details of Internet users. This is the first time that OPTA has acted to impose company and personal fines on distributors of unsolicited and undesirable software.

The three companies operated together under the name, DollarRevenue. Using misleading files, amongst other things, Internet users were led to believe that they were about to download apparently innocent files, whereas they actually contained DollarRevenue software. They also used botnets, thereby installing files without user intervention. Each day on average 60,000 installations were infected. A total of more than 450 million program files were illegally placed on 22 million computers. These program files unleashed a flood of popup windows containing advertisements. Unsolicited search toolbars were also installed. They were nested in the toolbars of Windows XP and Microsoft Internet Explorer, where they displayed alternative search results. DollarRevenue was one of the largest distributors of unsolicited software in the world (see, the website of a manufacture of anti-spyware software).

Hundreds of complaints appeared on the Internet about DollarRevenue software. They mentioned that people did not know how the software came to be on their computer nor how they should remove it. This is because the software did not include an uninstall function and could only be removed with expert assistance. DollarRevenue was amongst the top ten international distributors of spyware. Last summer OPTA imposed a conditional penalty on the two directors to ensure that these illegal activities were permanently halted.

The Dutch Universal Service and End Users Decree, is based on the Telecommunications Act and is designed to promote safe Internet usage and to protect the privacy of Internet users. The enterprises and their directors deliberately contravened provisions of this decree for a year and this produced large-scale material and immaterial damage. For this reason fines totalling EUR 1 million were imposed on both the enterprises and their directors. OPTA is of the opinion that these fines will have a sufficiently punitive and deterrent effect to deter these companies and anyone else from contravening the law (again). The persons can object against this decision, therefore the judge has not yet ruled on the penalty by OPTA.

DollarRevenue was a joint venture involving three Dutch enterprises and their directors. DollarRevenue was active from October 2005 until and including November 2006. The offenders earned a little over EUR 1 million through their illegal activities. The offenders had a network of intermediaries, also known as affiliates. The latter were other parties who distributed the software further using the above-mentioned methods on DollarRevenue’s instructions and in return for a fee. Based on tips and ex officio monitoring, regulatory officials within OPTA’s Internet Safety Team launched an investigation into DollarRevenue in 2006. Unannounced inspections were conducted in various locations in November 2006. As part of this process regulatory officials gained access to business administration records and computer systems. In addition, various people involved made statements. A report was drawn up based on the findings of these investigations. The relevant companies and their directors were able to present their case in response in both verbal and written form. One of the botnetherders, who was living in New Zealand, is recently arrested by the New Zealand police.

Fines totalling EUR 1 million have been imposed for these offences having regard to the gravity and duration of the offences, the culpability of the offenders and the gains they achieved through their offences. Two companies were jointly fined EUR 300,000. The responsible director was also fined with EUR 300,000.00. The other company was fined with EUR 200,000.00, as well as the director. The maximum fine which OPTA can impose for these types of offences on the basis of its policy rules on fines amounts to EUR 300,000.00.

For more information, read the pdf report.

Blog Posting Number: 955

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