Antitrust Lawyer Blog Commentary on Current Developments

FTC Sues to Halt Unfair Movieland Downloads

The Federal Trade Commission filed a complaint on August 15 in U.S. district court, seeking to halt an operation that downloads software barraging consumers with pop-ups demanding payment to make the pop-ups go away. The Office of the Attorney General of the State of Washington also sued the operators.
The FTC's complaint asked the court to order the defendants to give up their ill-gotten gains to provide for consumer redress. A U.S. district court judge denied a request by the FTC to issue a temporary restraining order. Trial on the merits of the case will be scheduled for a later time.

According to papers filed with the court, the defendants downloaded software that repeatedly pelted consumers' computers with pop-ups, accompanied by music that lasted nearly a minute, and could not be closed or minimized. These pop-ups demanded that consumers pay the defendants $29.95 to end the recurring pop-up cycle, claiming that consumers signed up for a three-day “free trial” of the defendants' Movieland Internet download services and did not cancel their “membership” before the trial period was over. Hundreds of consumers complained to the FTC. Most claimed they had never signed up for the “free trial,” never used Movieland's services, and never even heard of Movieland until they got their first demand for payment.

The FTC's complaint also alleged the defendants made it difficult or impossible for consumers to uninstall the software. Consumers attempting to remove it through the Windows Control Panel Add/Remove function were redirected to a Web page telling them that they had to pay the $29.95 fee to stop the pop-ups. The only way many consumers could regain control of their computers was to pay the defendants to stop the pop-ups, or pay a computer technician to help them.

The FTC charged that the scheme was unfair and deceptive and violated federal law. The agency's complaint alleged that demanding payment to fix the problem the defendants themselves created, and installing disruptive software that cannot be removed through reasonable means, is an unfair practice. In addition, the complaint alleges that the defendants made numerous false statements in an attempt to collect payments from consumers, including: 1) the computer owner or someone else consented to receiving the pop-up payment demands until they paid; 2) the owner of any computer that receives the pop-ups legally is obligated to pay Movieland; and, 3) the owner is obligated to satisfy any contract that any other person entered into while using the computer.

Authored by

Camelia C. Mazard
202-589-1837
cmazard@dbmlawgroup.com