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msnbc.com

It sounds innocent enough, even patriotic. “Show your support for our troops by downloading our free cursors!” says MyFreeCursors.com. One click, and your mouse pointer is an American flag. But that click will cost you. It gives the company behind the Web site, publicly traded eUniverse Inc., the right to watch your every move on the Internet.

“IT’S DIABOLICAL, and you can quote me on that,” said Beth Givens, director of the Privacy Rights Clearinghouse. A Web user complained to Givens after her child was almost tricked into downloading software from MyFreeCursors.com, software Givens called spyware.

“They are using patriotism as the draw ... People come to this Web site with good intentions. Little do they know they’re being set up for a spyware attack.”

Those who are induced by the offer to “Remember our men and women in uniform” might not think to click on the tiny “Privacy” link at the bottom of the site. But it’s essential reading. By downloading the software from MyFreeCursors, users also agree to install three other programs, including “KeenValue,” which is made by eUniverse.

EUniverse spokesperson Todd Smith said KeenValue wasn’t spyware, but simply marketing software that users choose to install.

“EUniverse is not in the spyware business,” he said via e-mail. “Unlike spyware, our KeenValue product does not track the user’s key stroke or gather any personal or confidential information that the user does not voluntarily provide to us. Our product serves information along with relevant ads to assist the consumer in making more informed choice about products of interest to them.”

Still, once installed, the software gathers a lot of information about users.

“Using KeenValue, eUniverse anonymously collects the following information,” the privacy policy on MyFreeCursor.com indicates: “Web sites/pages viewed, The amount of time spent at some Web sites, Response to the Advertisements displayed, Standard web log information including IP address and system settings, What software is on your personal computer, Your first and last name, country, and five digit ZIP code, Your usage characteristics and preferences.”

What’s more, the policy indicates that eUniverse has the right to install other software in the future on the users’ computer — and uninstalling the cursor program won’t remove this additional software from their system.

“Unless someone reads the privacy statement, they don’t realize they’ve been had,” Givens said.

EUniverse, which operates a wide swath of Internet properties, said the software is actually made by wholly-owned subsidiary ResponseBase Marketing, LLC.

The MyFreeCursors.com domain is actually registered to an organization listed as Internet Products Group. An operator who answered the phone number supplied said Internet Product Group was a division of eUniverse, but refused to give more details.

Smith said customer response to the product has been positive.

“We have received a tremendous amount of feedback from consumers that they love our free patriotic cursor software. Our Privacy Policy is clear and displayed for the user to read and acknowledge before downloading the program,” Smith wrote. “It is 100 percent up to the user to choose not to download the software or to remove it any any time if the user is not satisfied with our Privacy Policy or with the product itself.”

SEC INVESTIGATION, OTHER BAD NEWS

EUniverse has faced a spate of bad news in recent weeks.

Until recently, the company was considered a diamond in the rough of Internet stocks: It posted reported regular quarterly profits, thanks to healthy subscription rates and advertising revenues. Its share price soared some 250 percent from October to January, spurred in part by a December pre-announcement of raised second quarter profit expectations.

But chinks in the armor began to show on April 16, when eUniverse was forced to lower revenue expectations for the current quarter, and its stock price quickly fell by 25 percent. Three weeks later, the firm announced the good news from earlier in the year had been a mistake. On May 6, the company said its two prior quarterly announcements “should not be relied upon” — restated financial results will actually be lower.

Two days later, the company disclosed that the Securities and Exchange Commission had opened an “informal inquiry” into the company’s finances, and Take-Two Interactive CEO Jeffrey Lapin had resigned from the firm’s board of directors. A shareholder lawsuit soon followed.

EUniverse is also no stranger to privacy controversy. Three years ago, an eUniverse Web site named CDUniverse.com suffered the first widely-publicized credit card leak. In that incident, a hacker identifying himself as Maxus said he had stolen 350,000 credit card numbers from the site, and posted some of the data to the Internet after a failed extortion attempt. EUniverse later sold CDUniverse to concentrate on Web entertainment properties.

WATCHDOGS KEEP AN EYE OUT

Anthony Porter, co-founder of SpywareGuide.com, a site devoted to informing consumers about surreptitious software, said he started receiving complaints about eUniverse’s KeenValue software two weeks ago.

“KeenValue just came on our radar,” he said. “We [received] a couple of complaints from people wanting to know how to get rid of it ... in the past two weeks.”

Porter agreed with Smith’s assertion that KeenValue wasn’t spyware — he called it simply “invasive adware.”

Such software, which interrupts Web surfing with pop-up advertisements, has become a troubling issue for Internet users. Porter suspects other, similar programs like Gator and eZula been quietly installed on “tens of millions of computers” by consumers who don’t realize what they’re downloading when they agree to install a simple tool like a new mouse cursor.

Jan Hertsens, Porter’s partner in SpywareGuide, said adware firms are using more and more aggressive tactics as they struggle to survive in a difficult advertising market.

“As a result we see ... dirty tricks only (used) by virus writers until recently,” Hertsens said.

But Smith maintained that linking the eUniverse adware programs to a plea for Web users to support “our troops” was a common Internet strategy.

“The existing and most prevalent Internet model today provides free content to consumers that is most often subsidized by advertising,” Smith wrote. “We feel we are providing a valuable content service to consumers through our patriotic cursors and use advertising wrapped around this content to support the development and maintenance of our software.”

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