U.S. trade regulators announced that Sony BMG Music Entertainment has agreed to compensate consumers for damaging their computers with secretly embedded anti-piracy software.
The software used by Song BMG "exposed consumers to significant security risks and was unreasonably difficult to uninstall," said the U.S. Federal Trade Commission (FTC). The settlement requires Sony BMG to make further disclosures, to allow consumers to exchange the affected CDs and reimburse consumers for up to $150 to repair any damage to their computers, the FTC said.
The FTC charged that Sony BMG, a joint venture of Sony and Germany's Bertelsmann AG, engaged in a deceptive trade practice and violated the law by embedding music CDs with software that installed itself on consumers' computers without their consent and restricted the number of times the audio files could be copied.
The FTC also said that the software was used to help the company send marketing messages and created security vulnerabilities that could allow hackers and other third parties to gain access to consumers' computers.
The settle also requires Sony BMG to clearly disclose limitations on consumers' use of music CDs, bars it from using collected information for marketing and prohibits it from installing software without consumer consent.
In 2005, more than 12 million CDs on 52 Sony BMG titles were shipped, each loaded with one of two content protection programs. About 7 million of those CDs were sold.
Terms of the settlement allow consumers to exchange through the end of June 2007 the affected CDs purchased before Dec. 31, 2006, and reimburse them up to $150 to repair damage done when they tried to remove the software.
Sony BMG must also provide for a two-year period an uninstall tool and patches to repair the security vulnerabilities on consumers' computers and must advertise them on its Web site. It also must publish notices describing the exchange and repair reimbursement programs on its Web site.
Last month, Sony BMG reached a similar settlement with 41 states and the District of Columbia, agreeing to pay more than $4 million and to reimburse consumers.