Sony BMG settles with FTC

Sony BMG Entertainment has settled with the Federal Trade Commission (FTC) over charges the entertainment giant violated federal law when it surreptitiously installed digital rights management software on CDs last year. Under the agreement, Sony BMG must exchange CDs containing the rootkit-like technology through June 31 and must compensate affected consumers up to $150 to repair computer damage that may have occurred when trying to remove the software, according to an FTC news release.

The FTC said the software, designed to prevent users from copying music, posed a security risk.

"Installations of secret software that create security risks are intrusive and unlawful," FTC Chairwoman Deborah Platt Majoras said. "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."

"Not only did (the software) allow Sony's code to hide, it also created space for other malicious software to hide," Edward Felten, a Princeton University professor of computer science and public affairs, told SC Magazine for its December issue.