Earlier this month, we noted that the FTC had cracked down, yet again, on a company for putting up a bogus spyware scanner. The company would get people to their site where it would supposedly "scan" their hard drive for spyware. Of course, the scan was entirely bogus, and the scan would always tell you that your computer was rife with spyware. Then the site would tell you to buy its anti-spyware product for about $40. Of course, that anti-spyware product did absolutely nothing. The FTC ordered the company to shut down, but apparently the company is ignoring the order. It's now reached a point where a court has found the company in contempt and ordered it to pay $8,000/day until it complies. The execs in the company have had their assets frozen and the judge is now threatening to have them arrested. Sure, scamming may be easy money, but you would think these guys would at least shut down this operation and move on to some other bogus scam, rather than outright ignoring the court and the FTC.

Update: Now it comes out that these sites are using URL redirectors via Microsoft and the IRS to make people think they're legit.

A few years back the FTC shut down some scam fake anti-spyware companies that would advertise "free scans" of your computer and would then (of course) tell you you had spyware. The scam, of course, was that for a fee of only $30 or $40, you could buy their "software" that would supposedly rid your computer of spyware. Of course, your computer probably didn't already have spyware, and the software you bought certainly wouldn't do anything towards ridding your computer of any actual spyware. It looks like some new scammers have picked up where the old ones left off, because the FTC is announcing, yet again, that it's been able to shut down some bogus anti-spyware operations. Apparently, this operation was slightly more scammy, because advertising networks have stopped accepting ads for such bogus anti-spyware. So, instead, they pretended to place ads for legitimate companies, but then used some code to swap out the "good" ad with the bogus anti-spyware ad.

For nearly a decade, we've followed the changing business of what was originally called Gator. When it first launched, back in 1999, the company was offering an e-wallet product, and even though there were many such things on the market, Gator insisted that it was first. When it turned out that there wasn't much of a market for an e-wallet product, the company quickly morphed its business into popping up ads over existing ads -- which resulted in a whole bunch of lawsuits. It didn't take long before Gator realized that people didn't really want its software popping up ads, so it began tricking users into downloading. As many folks recall, Gator was one of the first real "spyware" companies -- tricking users into downloading a product that watched what they surfed and popped up ads.

As the whole spyware (the companies in the space preferred the adware label) got a bad name, Gator first threatened to sue anyone who called its product spyware, and then eventually decided to shed the baggage of the Gator name and renamed itself Claria. -- insisting that it was now a legitimate advertising firm. Except, the charges of spyware kept flying in Claria's direction. The company tried and failed to go public, and then, once again, insisted that it was getting out of the adware business and moving into "behavioral advertising" -- which, most people realized was just another term for what it had been doing in the past.

Plenty of folks were shocked when rumors started spreading that Microsoft wanted to buy Claria, though, the public backlash to the "leaked" rumor was so harsh that Microsoft very quickly backed away from those plans. So, without being able to IPO or sell itself -- and with a still awful reputation as a spyware provider, the company tried to change once again.

The company insisted (yet again) it was getting out of that old sketchy business, and tried to launch a "portal" that would provide relevant content based on how you surfed. In other words: it was still in the spyware business, just positioning it under a better name. The company did try and fail to sell off its traditional adware business.

After that, honestly, we hadn't heard much of a peep out of the company. Despite launching its portal to great fanfare (we were inundated with PR spam from the company about this great "portal" idea), it didn't seem to get any traction. We apparently missed the news that recently the company (through a somewhat complex transaction) changed its name, yet again, to JellyCloud. Basically, the same exec team started a new company just a few months ago, raising another $11.5 million, and then took over Claria, though carefully hid all connections to its past, claiming to be just another online advertising company.

However, Valleywag is now reporting that the company shut down this weekend (despite having just raised all that money, and not counting all the money it raised in the past). If so, it's a rather quiet end for the company that really did become synonymous with the "spyware" term, and helped create that whole space.

While American competitor NebuAd may be on the verge of shutting down, it appears that Phorm, the controversial clickstream tracking, behavioral ad company that focused mainly on the UK market, may be dodging a series of bullets. First, the government said that clickstream tracking could be legal if the situation was clearly explained to customers and there was an obvious mechanism for opting out. Now, UK police are dropping their own investigation of earlier trials with BT, which many believed were illegal because they were done with no notice to consumers at all, and no way to opt-out. That would seem to go against the government's earlier statements, but the police are saying that there's no evidence that this is a criminal matter -- which would leave this open to civil lawsuits from individuals who were impacted by the trials.

We've seen a few such cases in the past -- and they usually end with a judge telling the suing company to shove off, but here we have yet another company upset that its being labeled as an adware/spyware provider. In this case, it's a company called 7Search, which is suing McAfee. 7Search is claiming that McAfee's warning about "downloads" from its site having been "credibly" called adware or spyware are false and defamatory because 7Search no longer offers software for download off its site (though it apparently did in the past).

As Eric Goldman notes in the link above, just bringing these types of lawsuits tends to backfire. As we noted above, they rarely, if ever, win, and simply filing the lawsuit draws much more attention to the company -- often including reports from users about why they do think the software in question is adware or spyware. In the meantime, if 7Search no longer offers downloads, then it's not clear what it's upset about either, since it's not like the McAfee warning is going to stop people from downloading its software -- since, apparently, there's no software to download.

NebuAd is a company we've discussed before, that basically works with ISPs to use your clickstream data to send targeted ads. It's quite similar to Phorm, which has received plenty of attention for its questionable behavior over in the UK. Now, some researchers have looked into the details of what NebuAd really does... and it's not pretty:

NebuAd exploits normal browser and platform security behaviors by forging IP packets, allowing their own JavaScript code to be written into source code trusted by the Web browser. NebuAd and ISPs together cooperate in this attack against the intentions of the consumers, the designers of their software and the owners of the servers that they visit.... NebuAd breaks the rules of acceptable behavior on the Internet. It monitors what you do and see on the Internet, it breaks in and changes the contents of your private communications, it keeps track of what you've done, and if you even know that it's happening, it is impossible to opt-out of it."

Perhaps Charter Communications and other ISPs that have signed up for NebuAd should have researched things a little more thoroughly. Congress is already investigating the legality of something like NebuAd, and one assumes that a report like this may find its way to many of those politicians pretty quickly.

Eric Goldman has a fascinating post, pointing out that the era of sneaky adware seems to be pretty much over. For quite some time, one of the biggest annoyances online for many users were surreptitiously-installed client side adware programs that would pop up unwanted ads while you did other things. However, it appears that a combination of factors have pretty much wiped them out. Legal rulings found that the surreptitious installs (either with no notice or misleading notices) were fraud. Companies were sued, fined and went out of business. Security firms got better at catching and blocking these programs, and the few remaining firms in the space moved on to other projects (though, some are equally questionable). Either way, most folks probably didn't notice, because they either learned to avoid the sneaky adware or they were already well enough protected from it. Yet, as Goldman points out, pretty much everyone (with the possible exception of Zango) is no longer in the business of tricking people into installing ad-spewing software.

Of course, Goldman points out that no one has let the politicians in on this news yet, as many are still pushing various anti-spyware legislation that probably doesn't matter any more. He also points out that this doesn't mean questionable ad activity isn't still happening -- it's just moved on from sneakily installing an application on your harddrive. That's why Phorm (a former client-side adware maker) is in so much hot water these days. Its behavioral ad targeting solution may not be the same as the surreptitious client side ad spewing software -- but it's still surreptitiously watching your behavior and displaying ads based on it.

With a growing number of ISPs using services from companies like Phorm and NebuAd to inject ads into your web browsing based on your surfing habits, anti-spyware companies are starting to take notice and debate whether or not they should start blocking some of these activities. While there's no downloaded software, these services all use cookies to track your surfing habits, and anti-spyware offerings could certainly step in and block those cookies or more proactively warn users that their surfing data is being used in this manner. Considering how hard Phorm has worked to shed the "spyware" label it had been given in a previous life, the company can't be too pleased to hear about this development. Of course, it's probably more concerned with questions being raised about whether or not its service is even legal.

Earlier this month, we noted that three large UK ISPs had agreed to a questionable deal with a startup named "Phorm." The ISPs would share all of your surfing data with Phorm who would then target advertisements to you based on your surfing patterns. We raised some privacy concerns, and noted that Phorm's claims that it would anonymize the data were laughable, since every "anonymized" data set seems to get quickly de-anonymized. In the comments to that post, one commenter noted that the story was even worse, as Phorm was merely the reincarnation of a spyware firm that had made a rather infamous rootkit. Broadband Reports now has more on that story, noting that the firm has a very shady past. It makes you wonder why these big ISPs would link up with such a company and why more people aren't up in arms about what their ISPs are doing with their data.

If you've followed the spam/scam space for a while, you know the story of Sanford "Spamford" Wallace -- the original big name spammer. He was proud of what he did, though eventually claimed to shut down and go legit, even trying to run a night club for a while. However, the allure of questionable internet marketing activities proved to be too strong, and before long he was back on track, this time in the spyware business. Eventually, the FTC fined him $4 million, though, they apparently drastically lowered the amount when he showed hardship. A year ago, it was discovered that soon after this settlement with the FTC, Wallace went right back to spyware distribution using MySpace. The FTC doesn't seem nearly as inclined to cut Wallace any slack this time around, as it's filed contempt charges against Wallace, demanding that he hand over all of the profits from his MySpace scamming. The filing reveals more details that show just how scammy Wallace was on MySpace. He didn't just set up 11,000 fake profiles, as mentioned in the original filing, but he also used phishing techniques to get other users' logins, and then used the logins to spam other MySpace pages with comments. On top of that, he installed software to make it quite difficult to delete those comments. All this effort paid off, apparently earning Wallace $555,850 in just six months.