Movieland

Movieland, also known as Moviepass.tv or Popcorn.net, is a movie download service that has been the subject of thousands of complaints to the Federal Trade Commission (FTC), the Washington State Attorney General's Office, the Better Business Bureau, and others by consumers claiming they were held hostage by its repeated pop-up windows and demands for payment.

On 2006-08-08, the FTC filed a complaint against Movieland.com and eleven other defendants, charging them with having "engaged in a nationwide scheme to use deception and coercion to extract payments from consumers." The complaint alleges that the defendants downloaded software that repeatedly opened oversized pop-up windows that could not be closed or minimized, accompanied by music that lasted nearly a minute. The complaint further alleges that the pop-ups demanded payment of at least $29.95 to end the pop-up cycle, claiming that consumers had signed up for a three-day free trial but did not cancel their membership before the trial period was over, and were thus obligated to pay.

A complaint is not a finding or ruling that a defendant has actually violated the law. The case will be decided by the United States District Court for the Central District of California, which has set a trial date of January 2008.

A federal judge has denied the FTC's request for a temporary restraining order to stop the current billing practices.

"3 DAY TRIAL EXPIRED" pop-up window with dark background as illustrated in the FTC complaint

"PAYMENT OPTIONS" pop-up window as illustrated in the FTC complaint

The product

Movieland advertises its product by using pop-up ads at other sites. The ads offer a three-day free trial, with access to members-only content including music, news, updated sports scores and adult movies. The ads say there are no forms to fill out, and no need to provide a credit card number or an e-mail address. The company's main web page states "No Spyware," "Virus Free," and "No Extra Charge." Users download Movieland's download-manager program to access the service.

According to the terms of service at the company's web site, if users do not cancel or pay during the three day period, pop-up billing reminders will begin and users will be billed $29.95 per month.

Early consumer complaints

Movieland.com began operations sometime in the fall of 2005 or earlier. Consumer complaints began soon after. Most consumers claimed they had never signed up for the free trial, never used the service, and never even heard of Movieland until they got their first pop-up demand for payment. Some said they found the software on their machines after downloading a screensaver or other free utility. The company denies that it installs its software by stealthy means.

Media coverage as early as January 2006 recounted consumer complaints and mentioned that several anti-spyware companies were buying Google advertisements boasting their product's ability to "Remove Movieland Now".

The FTC complaint

On 2006-08-08, the FTC filed a complaint in United States District Court "to obtain preliminary and permanent injunctive relief, rescission of contracts, restitution, disgorgement and other equitable relief for Defendants' deceptive and unfair acts or practices in violation of Section 5(a) of the FTC Act".

In summary, the agency’s complaint alleges that the defendants are demanding payment to fix a problem that they themselves created, and are installing disruptive software that cannot be removed through reasonable means.

Pop-up cycle

According to the FTC complaint, Movieland repeatedly bombarded consumers with pop-up windows, accompanied by music that lasted nearly a minute. They demanded payment of $29.95 to end the recurring pop-up cycle, claiming that consumers had signed up for a three-day free trial and did not cancel the service before the trial period was over.

The complaint alleges "Installation of Defendants' download manager is merely a smokescreen concealing Defendants' true purpose: to install software and other files onto consumers' computers that enable Defendants to launch pop-up windows on consumers computers demanding payments to Defendants. These pop-up windows, which display both textual and audiovisual payment demands, significantly disrupt consumers' use of their computers. After Defendants cause these pop-up payment demands to display on a particular computer for the first time, they cause them to redisplay again and again with ever-increasing frequency."

The pop-ups have a large dark background and take up much of the screen, blocking access to other windows. They lack the familiar "X" or "–" symbols so cannot be closed or minimized, and the user's only option is to click "Continue". The first pop-up shows the date and time "our content access software was installed on your system and your 3 day free trial began", the text "Click 'Continue' to purchase your license and stop these reminders", and a graphic reading "STOP THESE REMINDERS NOW" and "CLICK CONTINUE". The only option offered is a button labeled "Continue".

Clicking "Continue" brings up the next pop-up, an audiovisual file featuring a woman who introduces herself as "your personal customer service representative" and states "Because you did not cancel during your trial period, you are now legally obligated to make your payment as per the terms and conditions you agreed to when you installed our content delivery software." As the video clip nears its conclusion (approximately 40 seconds after it begins), a dialog box entitled "PAYMENT OPTIONS" appears. Choosing its "Close this window" option closes the pop-ups until the cycle begins again.

Collection statements

In addition, the complaint alleges that the defendants made numerous false statements in an attempt to collect payments from consumers, including that: (1) the computer owner or someone else consented to receiving the pop-up payment demands until they paid; (2) the owner of any computer that receives the pop-ups is legally obligated to pay Movieland; and (3) the computer owner is obligated to satisfy any contract that any other person entered into while using the computer.

Customer service number

According to the complaint, the only customer service telephone number provided is a 900 number. When consumers call it, a recorded greeting tells them that they will incur a $34.95 charge if they do not hang up within three seconds.

Uninstalling

The complaint also alleges that the defendants made it difficult or impossible for consumers to uninstall the software. Those attempting to remove it through the Windows Control Panel "Add or Remove Programs" function were redirected to a web page telling them that they had to pay the $29.95 fee to stop the pop-ups. The only way many consumers could regain control of their computers was to pay the fee, or pay a computer technician to remove the software.

Defendants

The following ten companies and two individuals are named as defendants in the FTC complaint:

• Digital Enterprises, Inc. d/b/a Movieland.com
• Triumphant Videos, Inc. d/b/a Popcorn.net
• Pacificon International, Inc. d/b/a Vitalix
• Alchemy Communications, Inc.
• AccessMedia Networks, Inc.
• Innovative Networks, Inc.
• Film Web, Inc.
• Binary Source, Inc. d/b/a Moviepass.tv
• Mediacaster, Inc. d/b/a Mediacaster.net
• CS Hotline, Inc.
• Easton Herd, sole officer and director of Digital Enterprises and Triumphant Videos
• Andrew Garroni, an officer or director of Pacificon, Alchemy, Film Web, and Binary Source

Pre-trial stipulations

A federal judge denied the FTC's request for a permanent injunction to prohibit the defendants from continuing the acts and practices alleged in the complaint. On 2006-11-07 ten defendants, and on 2006-11-17 two defendants, and the FTC signed stipulations governing pre-trial conduct.

Without admitting any wrongdoing, violation of the law, or involvement in the acts and practices alleged in the complaint, the defendants agreed to, among other things:

• Make clear and prominent disclosures prior to any software download or installation

• Not download or install software without the user's express consent

• Not download or install software without disclosing clearly and prominently the nature, frequency, and duration of any pop-up windows that may appear regarding any purported obligation for payment

• Clearly label any single-click download or install buttons, and not pre-select these as the default

• Disclose clearly and prominently in the terms of service the nature, frequency, and duration of any pop-up windows that may appear regarding any purported obligation for payment

• Not generate more than five pop-up windows in any calendar day

• Not generate more than one pop-up window per hour

• Provide a button to silence pop-up windows and make them invisible until all other windows are closed

• Provide on each pop-up window a hyperlink, with toll-free number and email utility, to request stopping the pop-ups under certain conditions

• Not represent that consumers have any "legal" or "contractual" obligation to pay for the software unless the computer owner has provided personal identification and agreed to pay

• Not represent that failure to pay will result in collection proceedings or affect the owner's credit status unless the computer owner has provided personal identification and agreed to pay

• Customer service agents may state that they "believe" the computer owner is responsible for paying for the download, and offer several purchase options including a one-time 30-day non-renewing license for $29.95, after which access to the service will terminate.

Movieland's position

Movieland representatives say the downloads are not spyware and do not get on computers accidentally, insisting they are not "drive-by downloads". They say the FTC lawsuit was "improperly brought", and point out that a federal judge rejected the FTC's request for a temporary restraining order that would have immediately ended the current billing practices. The terms and conditions on the Movieland site warn users that the billing pop-up windows "will appear more frequently until you choose one of the payment options and pay for the license."

Movieland says the pop-ups are "an anti-fraud mechanism" that cannot be received without consumers intentionally downloading the software through several intentional steps, each of which has a default setting of "cancel". The company also states "there are no extrinsic programs (adware or otherwise) bundled with our software." The company disputes the claim that the software is "very difficult to get rid of", and says it can be removed through add/delete programs.

Trial date

The court has set a trial date of January 2008.

The Washington complaint

On 2006-08-14, the Attorney General of the state of Washington charged Movieland, Digital Enterprises, Herd, and Garroni with violating that state's Computer Spyware Act and its Consumer Protection Act. The complaint, filed in King County Superior Court in Seattle, alleges business acts and practices similar to those alleged in the FTC complaint, and further alleges violations of Washington state law.

The defendants could be fined up to $100,000 per violation of the Spyware Act and $2,000 per violation of the Consumer Protection Act if the court finds them liable. They may also have to pay restitution to affected consumers.

Alleged violations

The alleged violations of Washington state law are:

• Taking control of a user's computer in violation of the Spyware Act and the Consumer Protection Act (CPA), by remotely installing billing software that initiates and controls the pop-up cycle

• Misrepresenting the ability to uninstall software in violation of the same acts, by listing the software in Add/Remove Programs although the software cannot be uninstalled

• Unconscionable business practices in violation of the CPA, by the "aggressive and harassing" billing method used and the failure to disclose it, including use of a billing method "that forces payment by completely obstructing users' access to their computers"

• Threats, harassment and intimidation in billing practices in violation of the CPA, by threatening collection proceedings and an adverse effect on users' credit records, while in fact defendants do not even know the consumer's name; and referring to consumers' "legal obligation" to pay, when in fact there is no legally binding contract

• Failure to disclose material facts in violation of the CPA, the "aggressive, relentless, threatening" form of the payment demands; the fact that the uninstallation option for the software will be disabled; and that the defendants "transmit software to the user's computer surreptitiously"

• Misrepresentations in violation of the CPA, including stating the software contains "no spyware" when in fact the software itself constitutes spyware by its behavior.

Comments by Washington officials

In announcing the suit following a seven-month investigation, Washington Attorney General Rob McKenna rejected one possible defense. "The defendants' claim that users are legally obligated to pay for their service lacks merit because consumers did not provide knowing consent to the installation of the relentless pop-up demands", he said. "Furthermore, computer owners are not responsible to satisfy contracts that other people, including minors, entered into while using a computer." He also said that the defendants' threats of collection proceedings and adverse effects on users' credit ratings were empty, as the defendants have no way to personally identify computer users.

Assistant Attorney General Paula Selis said the tactics forced some consumers to give in and pay between $20 and $100 for the service. She said, "We sued them because we were getting complaints from consumers who felt that they were being harassed and held over a barrel for payments that they didn't agree to make." Selis said, "It was harassment, it was intimidation of the consumer. It was using a high-pressure tactic to make him or her pay for something they were not legally obligated to pay."

Product status

As of 2006-01-05, web sites movieland.com, moviepass.tv, and popcorn.net offer a movie download service on a free trial basis. The three sites have similar 5000-plus-word terms of service (TOS) agreements. Each TOS states that billing software will be enabled at the end of the trial period, with 40-second pop-up audiovisual reminders appearing no more than once per hour and five times per day until users choose one of the payment options and pay for a license. Each TOS states that if users fail to pay or cancel during the trial period, they have agreed to purchase an annual license; and that users agree to "timely make all payments due to Company". Users "understand and agree that the Service may include advertisements", and consent to automatic software updates and installations of "new Company properties".