Update: Washington gets $1M settlement in first spyware case

The company and president will pay $725,000 in legal fees and $200,000 in penalties, and reimburse the state's customers $75,000

Washington's attorney general has settled the first case prosecuted under the state's 2005 Computer Spyware Act.

The settlement announced Monday is with antispyware vendor Secure Computer. The White Plains, New York, software company was accused of marketing its product via deceptive spam and pop-up ads, which offered free spyware scans that always detected a problem with the computer that was scanned.

The company and its president, Paul Burke, will pay $725,000 in legal fees and $200,000 in penalties, and will reimburse Washington state customers $75,000, said Paula Selis, senior council with the attorney general's office. "Given the scope of the defendants' practices and the amount of consumer harm out there, we feel this is a very fair settlement."

More than 1,100 state residents purchased the company's Spyware Cleaner software since it went on the market in 2004, Selis said. Those customers will now be e-mailed by Secure Computer and offered a refund for the $49.95 product, under terms of the settlement.

Secure Computer, which admits no wrongdoing in the matter, is also prohibited from using deceptive marketing techniques to promote its software, and the company must now review the advertising of its marketing affiliates to make sure they comply with the settlement.

That seems like an unlikely possibility, however, because Spyware Cleaner was pulled from the market shortly after the lawsuits were filed in late January, and Secure Computer is now out of business, according to the company's Web site. Representatives from Secure Computer could not be reached for comment.

Burke, who was Secure Computer's president, has formed a new company called Safe App Software, which is now selling a registry cleaner product, Selis said. That product is not being sold in the U.S. she added.

Secure Computer and four of its business partners were sued by Microsoft and the Washington attorney general in January, but charges against three of the men have already been settled. A fourth man, Manoj Kumar of Maharashtra, India, could not be located, the attorney general's office said.

Burke and Secure Computer settled the Microsoft lawsuit about two months ago, said Spencer Freeman, an attorney with Freeman Law Firm Inc. who represented the defendants in the case.

Freeman declined to comment on Monday's settlement.

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