Internet marketing firm Intermix Media, probably best known for its MySpace social networking site, has agreed to settle a lawsuit brought by the New York Attorney General’s office. AG Eliot Spitzer sued Intermix in April, accusing it of secretly installing spy- and adware on millions of home computers.
Though it admits no wrongdoing, Los Angeles-based Intermix will pay a total of $7.5 million to the State of New York over three years. It also agreed to stop distributing its adware, redirect and toolbar programs. The company said it had already voluntarily ceased distributing the programs, but chose to settle to move forward with its business.
“Our mandate was to remove this obstacle to the company’s continued upward trend and to place this legacy business and related issues behind us,” said Richard Rosenblatt, Intermix CEO, in a statement.
The settlement comes as Intermix reported record revenue for its fiscal fourth quarter, which ended March 31. The company brought in $24.1 million for the quarter, but still reported a net loss of $409,000.
Since being sued by the New York AG, Intermix has created a chief privacy officer position and is in the process of hiring for the job. Additionally, it joined the Network Advertising Initiative (NAI), an industry group that’s successfully worked with the Federal Trade Commission on privacy issues related to online marketing. Trevor Hughes, executive director of the NAI, said the group welcomed Intermix’ participation as it works to forge industry best practices.
The New York Attorney General’s office filed suit after conducting a six-month investigation into Intermix, saying it discovered the company surreptitiously installed ad-delivery programs along with free software.
While the company admits to having distributed downloadable software in the past, it’s currently best known for the popular MySpace.com social networking site. Besides attracting advertising dollars, the site has been a platform for a number of high-profile entertainment marketing programs, including sneak previews of the TV series, “The Office,” and of a new Coldplay music release. MySpace attracted 15.5 million unique visitors during the month of May, according to comScore Media Metrix.
The agreement with the New York Attorney General is subject to court approval. Intermix said it expects a formal resolution in the matter in the next few weeks.
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