TERRE HAUTE, IN — Sony BMG Music Entertainment has agreed to settle Federal Trade Commission (FTC) charges that the company violated U.S. federal law when it sold music CDs without notifying consumers that the discs 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 marketing messages,” the FTC announced earlier this week.According to the FTC, Sony’s rootkit software also exposed customers to “significant security risks” and was “unreasonably difficult to uninstall.”

The proposed settlement agreement requires that Sony BMG provide clear disclosure concerning limitations on consumers’ use of music CDs, prohibits the company from using information collected by the software for marketing purposes, bars Sony BMG from installing software without consumer consent, and requires the company to provide a “reasonable means of uninstalling that software.”

The case represents another example of the FTC targeting companies that install software surreptitiously on the computers and other devices used by consumers; the Commission recently came to a similar settlement with the makers of the controversial Zango adware/spyware, in which the FTC charged the company with clandestinely installing their software without the express consent of consumers.

“Installations of secret software that create security risks are intrusive and unlawful,” said FTC Chairman Deborah Platt Majoras in a press release issued by the FTC Tuesday. “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 an FTC complaint that detailed 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.”

The DRM software also prevented the music on the CDs in question from being played on some portable digital devices, including the popular Apple iPod.

“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 stated in its press release Tuesday.

Under the proposed settlement, Sony BMG must also allow consumers to exchange CDs with the software in question through June 31st, 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.”

For more information on the Sony BMG settlement, see the information published to the FTC website at: http://www.ftc.gov/opa/2007/01/sony.htm.