Spyware

A Utah statute, the first in the nation, entitled “The Spyware Control Act,” was originally scheduled to take effect on May 3, but has been delayed by a legal challenge brought by a New York-based company, WhenU.com. WhenU.com filed suit in Salt Lake City on April 12, seeking a declaration that Utah’s new law violates the U.S. and Utah Constitutions. WhenU.com claims the act—which targets software downloaded onto a consumer’s computer that triggers pop-up advertisements—unfairly targets online contextual advertising services that aren’t linked to websites, but instead sells ads based on consumer browsing preferences. The Utah Attorney General agreed to delay the effective date of the Act until the hearing to allow WhenU.com to seek a preliminary injunction delaying implementation of the law. WhenU.com hopes it can persuade the court to delay enforcement until a trial can be held to test WhenU.com’s claims that the law is unconstitutional. At the hearing, WhenU.com’s lawyers argued that regulation of advertising on the Internet is a matter of interstate commerce subject to federal, not state, jurisdiction. Arguing the State’s case, lawyers noted that disrupting a consumer’s browsing and highlighting competitors goods and services is the kind of consumer protection the Utah Legislature has a right to prohibit. In protecting consumers, lawyers for the State also argued that computer users are often tricked into installing such software without adequate disclosures and then find it difficult to remove when unintended or unwanted consequences arise.

WhenU.com noted its software is only installed with consumer consent and that pop-up ads offer consumers useful free features (e.g., weather, screen savers, tool bars) in exchange for allowing software that tracks browsing habits and generates related ads on the screen. With such context-based advertising software, a consumer browsing mortgage lending websites might be offered home loan information from one or more lending institutions. Stay tuned.