Adware company Intermix settles lawsuit with Spitzer

Internet marketing company Intermix Media will pay $7.5 million to settle a lawsuit alleging that the company secretly installed spyware and adware on millions of home computers.

The company has reached an agreement in principle with the office of New York State Attorney General Eliot Spitzer that will see it pay the $7.5 million over the course of three years. Intermix, which has admitted no wrongdoing in the settlement, has also agreed to permanently stop distributing its adware, redirect and toolbar software, the company said in a statement, released Wednesday.

The Los Angeles company allegedly snuck spyware and adware into games, screensavers and cursor software that it offered for free on its Web sites, which include mycoolscreen.com and flowgo.com. The software would then create unwanted pop-up windows and automatically redirect Web browsers, the lawsuit claims.

The software could not be removed through the Windows uninstaller and sometimes reinstalled itself after being deleted, the lawsuit alleges.

Under New York's deceptive practices law, Intermix faced fines as high as $1.85 billion in the case, and the company had said that it hoped to reach a settlement.

Intermix expects the lawsuit to be formally resolved within "the next few weeks," the statement said.