Major advertisers caught in spyware net

updated 6:40 p.m. ET June 28, 2005

ALBANY, N.Y. - Unwanted software slithered into Patti McMann's home computer over the Internet and unleashed an annoying barrage of pop-up ads that sometimes flashed on her screen faster than she could close them.

Annoying, for sure. But the last straw came a year ago when the pop-ups began plugging such household names as J.C. Penney Co. and Capital One Financial Corp., companies McMann expected to know better.

Didn't they realize that trying to reach people through spyware and its ad-delivering subset, called adware, would only alienate them?

"It irritated the heck out of me," said McMann, a 45-year-old former corporate executive from Klamath Falls, Ore. "It took a week to take off every little piece of crap that was put on my computer. Every time I rebooted, it started to come up again."

Pop-up ads carried by spyware and adware aren't just employed by fringe companies hawking dubious wares — such as those tricky messages that tell you your computer has been corrupted.

You can count some big tech companies among its users, including broadband phone provider Vonage Holdings Corp., online employment agency Monster Worldwide Inc. and online travel agencies Expedia Inc., Priceline.com Inc. and Orbitz LLC.

These companies acknowledge they've used adware to reach potential customers, though they say they shun any programs that monitor online surfing or extract personal information.

Even Fortune 500 companies have turned to adware: Sprint Corp. for its PCS mobile phones, major banks peddling Visa credit cards, Sony Corp. and retailers including Circuit City Stores Inc. And Mercedes-Benz USA had its cars flashing on consumer's computer screens before the company, fielding complaints, put on the brakes.

Attempts to reach officials at J.C. Penney and Capital One about their use of adware pop-ups were unavailing. Neither returned repeated calls for comment.

Spyware and adware often land on computers without their owners' full knowledge, hitching a ride during visits to porn and gambling sites or in downloads of free games and screensavers. Often, the payload arrives with downloads of cartoon-character wares aimed at children.

Infected computer users can get barraged with pop-up ads and find the unwanted programs difficult to remove.

So far, law enforcement has mostly targeted the transmitters. Intermix Media Inc. has agreed to pay $7.5 million in a tentative settlement of a lawsuit by New York Attorney General Eliot Spitzer.

But Spitzer isn't stopping there. He is threatening to hold accountable household-name advertisers that use adware networks. No longer, says Spitzer, can companies play dumb.

That's making many advertisers nervous, though they insist they work with subcontractors and often don't know about any adware use until they get a complaint.

"There's plausible deniability at each tier," said Chris King, product marketing manager at anti-spyware vendor Blue Coat Systems Inc.

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