• by Wendy Davis  @wendyndavis, April 29, 2005

New York State Attorney General Eliot Spitzer filed a lawsuit against Los Angeles-based Intermix Thursday, alleging that the company's installations of adware on consumers' computers amounted to deceptive business practices and false advertising under New York state laws. Industry observers say the case has broad implications because the practices complained about in the lawsuit are common within the adware industry.

In its complaint, Spitzer's office alleges that Intermix installs ad-serving software on users' computers without sufficient notice. The lawsuit states that an Attorney General investigator who examined the company across seven Web sites for four months found that Intermix bundled its ad-serving software with software such as screensavers and games, and didn't adequately alert consumers that they would receive pop-up ads after downloading the programs.

The lawsuit alleges that Intermix both surreptitiously installs adware and that it sometimes buries notice of its adware programs in the fine print of its end-user license agreement. "Intermix either fails to disclose these additional programs in any manner, or hides mention of them deep within a lengthy, legalistic license agreement. Even in the latter case, the information provided is vague, incomplete and often factually inaccurate," states the complaint. Spitzer's office is seeking an injunction against Intermix and monetary damages.

Intermix Thursday issued the statement: "Many of the practices being challenged were instituted under prior leadership, and Intermix has been voluntarily and proactively improving these applications and related consumer disclosure and functionality for some time. In an abundance of caution, we voluntarily ceased distribution of the applications at issue earlier this month." The company also stated it expected to continue talks with Spitzer's office.

The lawsuit came as a shock to some industry observers because, they say, many adware companies' license agreements are similar to the one allegedly used by Intermix. "The practices that the New York State Attorney General has identified as unfair and deceptive and objectionable, are practices that are very common in the adware industry," said adware researcher Eric Howes, who runs the site Spyware Warrior.com.

Reporter Shankar Gupta contributed to this article.