Sony settlement prohibits secret CD software

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WASHINGTON -- Sony BMG Music settled federal charges that it violated the law when it sold CDs without telling customers that they contain software that limited buyers' ability to play the music and kept track of listening habits, the Federal Trade Commission said Tuesday.

The proposed settlement, approved on a 5-0 vote, 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 FTC said.

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," FTC Chairman Deborah Platt Majoras said in a press release. "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 content protection software, also known as Digital Rights Management software, in the CDs that installed itself on consumers' computers, to restrict the number of times the audio files could be copied and to prevent the music from being played on portable digital devices other than Sony or Microsoft 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 settlement also 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 Sony BMG must to tell consumers on their 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.
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