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October 5, 2005

Walter Rines hit with FTC spyware lawsuit

Walt Rines, like his former partner and spam king Sanford Wallace, is on the receiving end of a spyware lawsuit from the Federal Trade Commission.

Late last month, the FTC sued Rines and his company Odysseus Marketing in federal court in New Hampshire. The FTC announced the lawsuit today.

Rines told MSNBC.com today that he's innocent. "I have not done anything wrong nor broken any of the laws they are claiming," said Rines.

That's essentially what Rines told me two years ago when I did a story about him and his spyware operation for New Hampshire Public Radio.

At the time, Rines said a disclaimer at Kazanon.com, the main site where he was distributing his Trojan horse program, acknowledged that "adware" was being installed on users' computers. He admitted that he was operating in a legal "grey area."

The Kazanon.com site currently appears to be unavailable, but there's an archived version online, where you can read Kazanon's Terms of Use. Excerpt:

"User hereby understands and gives permission for application and/or any associated components to alter applications, files, and/or data so as to display information and/or marketing messages, including but not limited to file sharing applications, media viewers, and/or player applications."

The FTC hired SANS instructor Eric Cole to analyze Clientman, the core spyware program distributed by Rines. In an 18-page declaration (PDF) dated September 15, 2005, Cole concluded that "Kazanon’s main function, if not its only function, is to load spyware, adware, and other software onto the computer without the computer user’s knowledge or authorization."

The FTC wants the court to shut down Rines' company and strip him of his "ill-gotten revenues." The FTC has also asked for a temporary restraining order to be issued. A hearing on the TRO is set for tomorrow.

Posted by brian at October 5, 2005 1:48 PM