SEATTLE – Washington State Attorney General Rob McKenna today announced a settlement with three California-based businesses that resolves allegations they installed software that took control of a consumer’s computer by launching aggressive and persistent pop-ups that demanded payment for a movie download service. The software was installed after users signed up for a seemingly anonymous free trial for the service.
“Under this settlement, Movieland.com and its associated companies agree to cease offering anonymous free trials to Washington consumers for their movie download service,” said Attorney General Rob McKenna “Additionally, the defendants must receive express consent from Washington consumers before installing any billing software on the user’s computer, disclose whether the software will cause any pop-ups and clearly state all important contract terms in any advertisement.”
The state filed its original lawsuit last summer following an investigation by the Attorney General’s Consumer Protection High-Tech Unit. The suit accused the following of violating Washington’s Computer Spyware and Consumer Protection acts: Digital Enterprises of West Hills, doing business as Movieland.com; AccessMedia Networks of Los Angeles; Innovative Networks of Woodland Hills; and Alchemy Communications of Los Angeles.
Allegations against Alchemy were subsequently dismissed and the state reached a stipulated agreement with the remaining defendants that was filed today in King County Superior Court. Two company officials, Digital Enterprises’ Easton A. Herd, and Alchemy’s Andrew M. Garroni, are also parties to the settlement, which does not include a finding or admission of wrongdoing.
The defendants agreed to pay a total of $50,000 to resolve the allegations. They also agreed to provisions that limit their business practices.
According to the state’s complaint, the defendants promoted a movie download service through Web sites including movieland.com, moviepass.tv and popcorn.net that offered consumers a free three-day trial. Billing software was then downloaded onto the personal computers of consumers who accepted the offer.
After the trial period, defendants remotely activated the billing software, causing a popup window to appear that indicated the trial period had expired. Consumers who clicked on a “Continue” link on the pop-up were then shown a 40-second video that recurred hourly and told them that they were legally obligated to purchase a subscription. A statement on the company’s Web site also indicated that failure to pay “may result in an escalation of collection proceedings that could have an adverse effect on your credit status.”
“Despite the warning, defendants weren’t able to affect a consumer’s credit record because they did not have any way to personally identify a consumer,” said Senior Counsel Paula Selis, who helped lead the state’s investigation. “The software was difficult to remove and many frustrated consumers ultimately paid between $19.95 and $80 for the service in order to stop the pop-ups.”
Washington’s Computer Spyware Act prohibits, among other things, installing software on a computer without a user’s consent, taking control of a user’s computer, and interfering with the user’s ability to identify and remove that software.
Under the settlement terms, the defendants must not offer anonymous free trials in Washington for their movie download service. If they use a software-based collection method, they must:
- Not attempt to collect payments from Washington residents unless they have a valid contract. In order for a valid contract to exist, consumers must click on a button indicating they understand and consent to the contract terms, provide a credit card number or other personal form of identification and state that they are 18 or older and authorized to download software on the computer.
- Prominently disclose contract terms in any advertisement for goods or services. This would include the cost of any subscription service.
- Not install any software program on the computer of a Washington resident without the express consent of the computer owner or an authorized user. Before seeking consent to install software, they must disclose whether downloading the software would cause any pop-up messages concerning payment obligations and the nature, frequently and duration of those messages. If consumers give consent, the defendants can’t send more than five pop-up messages in a day or more than one message per hour. Consumers must also be able to close the pop-up windows and silence any audio messages.
Washington’s settlement does not affect other legal actions concerning the defendants.
The Attorney General’s Office is offering a refund program for consumers who believe they have been subject to the defendants’ practices. Washington residents who believe they are eligible for a refund should file a complaint with the Attorney General’s Consumer Protection Division online at www.atg.wa.gov or call 1-800-551-4636 (number only available in-state) to request a complaint form.
Media Contacts: Kristin Alexander, Public Information Officer, (206) 464-6432
Paula Selis, Assistant Attorney General, (206) 464-7662