Spyware Poses Risk to Consumers

says FTC Testimony to House Committee

The FTC has told the Subcommittee on Commerce, Trade, and Consumer Protection of the House Committee on Energy and Commerce that "spyware appears to be a new and rapidly growing practice that poses a risk of serious harm to consumers." In testimony before this Subcommittee, the Commission stated that the FTC is studying the issues surrounding spyware
". . . so that government responses to spyware will be focused and effective."

Spyware has been defined as

"software that aids in gathering information about a person or organization without their knowledge and which may send such information to another entity without the consumer's consent, or asserts control over a computer without the consumer's knowledge."

The testimony relates details of a "spyware workshop" recently hosted by the FTC that examined issues associated with four topics:

* the definition of "spyware," and whether spyware differs from "adware;"
* spyware's general effects on consumers and competition;
* the potential security and privacy risks associated with spyware; and
* industry initiatives and governmental responses related to spyware.

The testimony notes that while the agency is continuing to receive information about the issue, some preliminary conclusions emerged from the workshop.

Defining spyware is a challenge. "'Spyware' is an elastic and vague term that has been used to describe a wide range of software. Some definitions of spyware could be so broad that they cover software that is beneficial or benign; software that is beneficial but misused; or software that is just poorly written or has inefficient code."

Spyware poses potential risks. "These include invasions of privacy, security risks, and functionality problems for consumers." Spyware also could promote identity theft by harvesting personally identifiable information from consumers' computers, and it may adversely affect the operation of personal computers. "These harms are problems in themselves, and could lead to a loss in consumer confidence in the Internet as a medium of communication and commerce," the testimony says.

Spyware can cause problems for businesses. Companies may incur costs as they seek to block and remove spyware from their employees' computers; productivity may be affected by pop-up ads launched by spyware; and keystroke capturing by spyware could put trade secrets at risk.

Threats are Real and Significant

The FTC testimony says "Given how broadly spyware can be distributed and the severity of some of its potential risks, government, industry, and consumers should treat the threats to privacy, security, and functionality posed by spyware as real and significant"

Prepared Statement of the Federal Trade Commission on "Spyware" Presented by Commissioner Mozelle W. Thompson and J. Howard Beales, III, Director, Bureau of Consumer Protection, Before the Subcommittee On Commerce, Trade, and Consumer Protection of the Committee on Energy and Commerce, United States House of Representatives. Text of the Commission Testimony
http://www.ftc.gov/os/2004/04/040429spywaretestimony.htm

Copies of the are available from the FTC's Web site at http://www.ftc.gov and also from the FTC's Consumer Response Center, Room 130, 600 Pennsylvania Avenue, N.W., Washington, DC 20580. The FTC works for the consumer to prevent fraudulent, deceptive, and unfair business practices in the marketplace and to provide information to help consumers spot, stop, and avoid them. To file a complaint, or to get free information on any of 150 consumer topics, call toll-free, 1-877-FTC-HELP (1 877-382-4357), or use the complaint form at www.ftc.gov . The FTC enters Internet, telemarketing, identity theft, and other fraud-related complaints into Consumer Sentinel, a secure, online database available to hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.

Additional:

* http://www.ftc.gov/opa/2004/04/spywaretest.htm
* http://www.ftc.gov/os/2004/04/index.htm#29

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