Sony BMG should exchange CDs polluted with spyware and pay $150 in repair money to each victim, says a US Federal Trade Commission proposal.

In the latest installment of the Sony BMG rookit DRM consumer control scandal, the spyware, "exposed consumers to significant security risks and was unreasonably difficult to uninstall" and, "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 marketing messages," says the FTC, following a unanimous vote.

Sony BMG must in addition, "provide financial inducements to retailers to return the CDs that create security problems for consumers' computers," says the FTC. "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."

It must, "clearly disclose limitations on consumers' use of music CDs" under the settlement, which also 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," says the FTC.

"Installations of secret software that create security risks are intrusive and unlawful," states FTC chairwoman 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."

The FTC alleges Sony 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," says the statemen, adding:.

"Finally, the settlement contains record-keeping and reporting provisions designed to allow the agency to monitor compliance with its order."

The agreement will be subject to public comment for 30 days beginning today and continuing through March 1, says the FTC. After that, it'll decide whether or not to make it final.

Comments should be addressed to the FTC, Office of the Secretary, Room H-135, 600 Pennsylvania Avenue, NW, Washington, DC 20580.

Copies of the complaint, proposed consent agreement and an analysis to aid public comment are available from the FTC web site and from the FTC’s Consumer Response Center, Room 130, 600 Pennsylvania Avenue, NW, Washington, D.C. 20580.

. Slashdot it!

Also See:
proposal - Sony BMG Settles FTC Charges, January 30, 2007