Sony BMG Settles FTC Charges
Sony BMG Music Entertainment has agreed to settle Federal
Trade Commission charges that it violated federal law when it sold CDs without
telling consumers that they contained software that limited the devices on which
the music could be played, restricted the number of copies that could be made,
and contained technology that monitored their listening habits to send them
According to the FTC, the software also exposed consumers to significant security
risks and was unreasonably difficult to uninstall. The proposed settlement requires
Sony BMG to clearly disclose limitations on consumers’ use of music CDs,
bars it from using collected information for marketing, prohibits it from installing
software without consumer consent, and requires it to provide a reasonable means
of uninstalling that software. The settlement also requires that Sony BMG allow
consumers to exchange the CDs through June 31, 2007, and reimburse consumers
for up to $150 to repair damage to their computers that they may have suffered
in trying to remove the software.
“Installations of secret software that create security risks are intrusive
and unlawful,” said FTC Chairman Deborah Platt Majoras. “Consumers’
computers belong to them, and companies must adequately disclose unexpected
limitations on the customary use of their products so consumers can make informed
decisions regarding whether to purchase and install that content.”
According to the complaint detailing the charges, Sony BMG embedded in its music
CDs content protection software, also known as Digital Rights Management software,
which installed itself on consumers’ computers to restrict the number
of times the audio files could be copied. It also prevented the music from being
played on certain portable digital devices. The music could not be transferred
directly to iPods, for example. In addition to restricting the use of the CDs
on computers using the Windows Operating System, the software, which was concealed
from consumers, created security vulnerabilities that could allow hackers and
other third parties to gain access to consumers’ computers.
The FTC alleges that the installation of software without consumer consent that
exposed consumers’ computers to security risks was unfair and violated
federal law. In addition, the complaint alleges that hiding the software from
consumers and failing to provide a means to uninstall it also were unfair practices
in violation of federal law.
The agency charged that it was deceptive for Sony BMG to fail to disclose adequately
that software would be installed on consumers’ computers, and that the
software would limit consumers’ copying and use of the CDs on their computers.
The FTC also alleged that it was deceptive, in violation of federal law, to
fail to disclose that Sony BMG’s monitoring technology, included on many
of its CDs, monitored consumers’ music listening preferences and sent
targeted marketing ads to their computers.
The settlement requires clear and prominent disclosure on the packaging of Sony
BMG’s future CDs of any limits on copying or restrictions on the use of
playback devices. It bars the company from installing content protection software
without obtaining consumers’ authorization, and, if Sony BMG conditions
consumers’ use of its CDs on installation of the content protection software,
it must disclose that requirement on the product packaging.
In addition, the settlement bars Sony BMG from using the information on consumers’
listening preferences that it has already gathered through the monitoring technology
it installed and bars them from using the information to deliver ads to those
consumers. For future CDs containing such technology, the agreement requires
that, before transmitting information about consumers, their computers or their
use of the CD, Sony BMG must clearly disclose on consumers’ computer screens
what the technology will do, and obtain consumers’ consent. If it conditions
consumers’ use of its CDs on their agreement to have information collected,
Sony BMG must disclose that condition clearly on the CDs’ packaging.
The settlement bars Sony BMG from installing or hiding content protection software
that prevents consumers from finding or removing the software, and requires
that it provide a reasonable and effective way to uninstall any content protection
software. It requires that for two years, Sony BMG provide an uninstall tool
and patches to repair the security vulnerabilities created on consumers’
computers by previously installed software. The company is required to advertise
these free fixes on its Web site.
As part of the settlement, Sony BMG will allow consumers to exchange CDs containing
the concealed software purchased before December 31, 2006 for new CDs that are
not content-protected, and will be required to reimburse consumers up to $150
to repair damage that resulted directly from consumers’ attempts to remove
the software installed without their consent. Sony BMG is required to publish
notices on its Web site describing the exchange and repair reimbursement programs.
Sony BMG also is required to provide financial inducements to retailers to return
the CDs that create security problems for consumers’ computers. For CDs
already in its stock that are sold to retailers, Sony BMG is required to disclose
on the product packaging the restrictions on use and the security vulnerabilities.
Finally, the settlement contains record-keeping and reporting provisions designed
to allow the agency to monitor compliance with its order.
The Commission vote to accept the proposed consent agreement was 5-0. The FTC
will publish an announcement regarding the agreement in the Federal Register
shortly. The agreement will be subject to public comment for 30 days, beginning
today and continuing through March 1, after which the Commission will decide
whether to make it final. Comments should be addressed to the FTC, Office of
the Secretary, Room H-135, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580.
The FTC is requesting that any comment filed in paper form near the end of the
public comment period be sent by courier or overnight service, if possible,
because U.S. postal mail in the Washington area and at the Commission is subject
to delay due to heightened security precautions.
Home - Desktops - Laptops
- Internet - Cell
Phones - Digital Cameras
Printers - Scanners
- Contact Us -
Privacy - ContactoMagazine.com