Intermix Media Inc. says it is settling spyware lawsuit with N.Y. attorney general

MICHAEL GORMLEY Wed Jun 15, 2:59 PM ET

ALBANY, N.Y. (AP) - New York Attorney General Eliot Spitzer has reached an agreement in principle with web marketer Intermix Media Inc. in which the company has agreed to pay $7.5 million US over three years to settle accusations that Intermix surreptitiously installed software on computers.

Spitzer spokesman Brad Maione said a final agreement is two to three weeks away and must be approved by the court. But under the tentative agreement Intermix would agree to cease ad-related downloads.

Intermix spokeswoman Sara Jones said it has not yet been determined how the $7.5 million would be distributed and if any would go to consumers.

Spitzer filed the civil suit in April in a campaign against the fraudulent or nuisance-filled applications that he has said hurt Internet commerce. Spitzer charged Intermix with secretly installing "adware" - software that delivers pop-up advertisements or similar promotions. The company did this, he said, by offering free screen savers or other products that, when accepted, would download the adware.

Intermix said it already has voluntarily stopped distributing its adware, toolbar and "redirect" programs, that automatically redirect users to an advertising page, and the company said Tuesday it is agreeing to permanently stop the practice as part of a settlement.

It is also hiring a "chief privacy officer" and joined the Network Advertising Initiative, an industry group that is working to self-regulate the Internet advertising industry.

Intermix has not admitted any wrongdoing or liability.

The Los Angeles-based company runs a collection of websites featuring quizzes, games and jokes that it packages for advertisers. Intermix said downloadable software has not been central to its management's vision and was not a material part of its financial forecast for fiscal 2006.