Judge Denies McAfee's Motion To Dismiss Counts In Data-Pass Lawsuit

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A lawsuit against McAfee for allegedly tricking consumers into purchasing unwanted subscriptions to services unrelated to the security company's software has cleared a preliminary hurdle.

U.S. District Court Judge Lucy Koh in San Jose recently denied McAfee's motion to dismiss several counts related to the alleged datapass marketing scheme. Koh's decision paves the way for the potential class-action lawsuit, filed in April by Melissa Ferrington and Cheryl Schmidt, to proceed.

Ferrington and Schmidt allege that McAfee transferred their credit card information to a separate company immediately after they had purchased software but before they had downloaded it. That third company allegedly served them pop-up ads for separate products at a cost of $4.95 a month. The ads had a "try it now" button which, when clicked, allegedly resulted in the third party enrolling Ferrington and Schmidt in the paid program.

"The pop-up contains no obvious visual cues or conspicuous text indicating that it is an advertisement for another product, or that clicking on 'Try It Now' will lead not to the delivery of the McAfee product but rather to the purchase of a completely different product," they alleged in their lawsuit. "Instead, all of the obvious visual cues suggest that 'Try It Now" is a necessary step in downloading the McAfee software."

Although the pop-up contained disclosures, Ferrington and Schmidt allege that the critical information "appears in nearly illegible gray 6 point type set against a gray background."

Datapass marketing has come under fire in Congress and from state law enforcement officials. Senate Commerce Committee Chairman Jay Rockefeller (D-W.Va.) recently proposed a bill to ban companies from enrolling consumers in paid-subscription programs unless the consumers entered their credit card numbers and agreed to the program. In addition, two post-transaction companies -- Webloyalty and Affinion -- recently agreed to pay a total of more than $13 million as a result of a probe by New York State Attorney General Andrew Cuomo.

The major post-transaction companies -- Webloyalty, Affinion and Vertrue -- recently revised their practices and now require consumers to re-enter all 16 digits of their credit cards to enroll in discount clubs after making purchases.

Internet law expert Venkat Balasubramani said the allegations against McAfee, if true, could leave the company vulnerable.

"A robust disclosure may insulate an internet merchant who refers its customers to a rewards program at the point of sale, but the plaintiffs' allegations (and the dispute as to the terms that were presented to the consumers) easily take this case outside this category," he said in a blog post about the decision.

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