CONCORD, NH – As a result of a lawsuit filed by the U.S. Federal Trade Commission (FTC), a U.S. District Court Judge in New Hampshire has halted the operations of spyware company Smartbot.Net and ordered the company to forfeit more than $4 million in “ill-gotten gains,” according to a press release issued by the FTC.The court also ordered another spyware operator to cease its “stealthy download” methods and barred their collection of personal information from consumers, pending trial.

In its lawsuit, the FTC alleged that Smartbot.Net and its owner Sanford Wallace “exploited a security vulnerability in Microsoft’s Internet Explorer’s Web browser in order to distribute spyware.”

According to the FSC release, The spyware caused the CD-ROM tray on PCs to open and then generated messages on computer screens reading “If your cd-rom drive’s open …You DESPERATELY NEED to rid your system of spyware pop-ups IMMEDIATELY! Spyware programmers can control your computer hardware if you failed to protect your computer right at this moment! Download Spy Wiper NOW!”

Spy Wiper and Spy Deleter, supposed anti-spyware products promoted by Smartbot.Net, sold for $30, according to the FSC.

The default judgment against Wallace and Smartbot.Net orders them to forfeit $4,089,500 and bars them from “downloading spyware onto consumers’ computers; from downloading any software without consumers’ consent; from redirecting consumers’ computers to sites or servers other than those the consumers selected to visit; from changing any Web browser’s default home page; and from modifying or replacing the search features or functions of any search engine.”

A settlement with two other defendants, OptinTrade and Jared Lansky, bars the same practices Wallace and Smartbot.Net are prohibited from engaging in. Lansky, an affiliate who promoted Wallace’s spyware, will also give up $227,000 in gains from distribution of the spyware.

In the second case, the FTC charges that Odysseus Marketing and its principal, Walter Rines, “lured consumers to their Web site by advertising bogus software they claimed would allow consumers to engage in anonymous peer-to-peer file sharing.”

According to the FTC, Odysseus’ spyware and other software bundled with it “hijacked search engines and reformatted search engine results, placing Rines’ clients first.”

The FTC recently amended its complaint against Odysseus, adding charges that Odysseus and Rines also distributed spyware by exploiting security vulnerabilities in Internet Explorer and other applications and that “the defendants’ spyware captured consumers’ personal information, including their names, addresses, e-mail addresses, telephone numbers, internet browsing and shopping history, and information about their online transactions.”

The FTC’s amended complaint alleges that once captured, the consumer information was “transmitted to defendants’ internet servers, where they compiled the information into a database in order to sell access to the data.”

In response to the amended FTC complaint, a revised preliminary injunction has been issued against Odysseus and Rines, barring them from “downloading spyware without consumers’ consent, and from disclosing, using, or further obtaining consumers’ personal information,” pending trial.

According to the press release, the FTC will also ask the court to order a “permanent halt” to the activities of Odysseus and Rines, and to “give up their ill-gotten gains.”