On Tuesday, the New York Attorney Generalfiled suit against notorious spyware vendor Direct Revenue. In a detailed complaint, the NYAG alleged Direct Revenue surreptitiously installed spyware onto users' computers and made its spyware exceptionally difficult to remove. The suit includes claims under New York's General Business Law (prohibiting false advertising and deceptive business practices), New York's Penal Law (prohibiting computer tampering), and New York's common law prohibitions against trespass.
The NYAG's complaint was accompanied by more than a thousand pages of exhibits and appendices. Some of these documents present the results of NYAG's testing -- narratives of misleading and nonconsensual installation, not unlike my own installation tests. But the NYAG also produced a treasure trove of documents: Internal Direct Revenue documents, records, and emails that present their strategy, intentions, and plans in great detail.
Some documents and findings of particular interest:
Revenues reported at
$6.9 million in 2003, $39 million in 2004, $33 million in January-October 2005. 2004 expenses total only $13 million, for a profit margin of 66%.
Payments to Direct Revenue's senior staff, totaling more than $27 million.
A list of distributors of Direct Revenue's spyware, with the number of installations attributable to each.
Admission that Direct Revenue for a time sold a "majority" of its advertising through ad networks Traffic Marketplace and ValueClick.
Admission that Direct Revenue's ads appear so frequently that they constitute "user abuse." But reducing ad frequency lowers company revenues, so frequency stays high.
Admission that Direct Revenue previously tracked and transmited users' GET and POST data -- names, addresses, emails -- and even sent this data to third parties Hitwise and Compete.com. Itemizes the specific personal information collected from online forms: first name, last name, e-mail address, street address, and zip code. Hitwise reports successfully analyzing and matching users' IDs, genders, and phone numbers.
Instructs making Direct Revenue harder to remove, by deleting its entry from Control Panel's Add/Remove Programs, because too many users were relying on that method to remove Direct Revenue.
Report of April-June 2005 payments from Yahoo, totaling more than $600,000 in those three months alone.
Installation by Direct Revenue of Ebates' Moe Money Maker onto users' computers.
Listing of Direct Revenue's many names and shell companies, all used to confuse and deceive the public.
Complaints from Direct Revenue partners, such as Kazaa (which called Direct Revenue's ads "purposefully confusing to the user") and Integrated Search (which wanted Direct Revenue to include an uninstaller in Control Panel, as previously promised)
Threatening the Center for Democracy and Technology. Demanding revisions from CNET. Hiring an investigator to track anti-spyware researcher Webhelper, and planning tactics to intimidate him.
Claims I am "losing credibility in the industry" and calls me a "fanatic."
Endorses NYAG's suit against Intermix as an "important opportunity to draw a bright line between purveyors of spyware and legitimate behavioral marketing companies like Direct Revenue."
Scores of complaints from users (1, 2, 3 , 4, 5, 6, 7, 8, 9) Direct Revenue staff
call one complaining user an "idiot."
Complaints from Direct Revenue's investors get special handling. One investor worries that another member of his investment firm, former Secretary of the Treasury Bob Rubin, may learn of Direct Revenue's practices.
Reports daily revenue per user at approximately $0.015 (one and one half cents per user per day). (Compare that revenue with the harm caused to users -- the amount a typical user would be willing to pay not to have Direct Revenue installed.)