Peer-to-Peer File Sharing Software Developer Settles FTC Charges that Default Shared Settings Misled Consumers

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Federal Trade Commission v. Frostwire LLC, No. 11–CV–23643 (S.D. Fla. Oct. 12, 2011) Under a settlement between a distributor of file sharing software and the Federal Trade Commission ("FTC"), the U.S. District Court for the Southern District of Florida issued a stipulated order for a permanent injunction against a provider of file sharing software requiring clear and prominent disclosures of sharing capabilities and prohibiting it from distributing copies of the unlawful versions of its software.

FTC Alleges Deceptive File Sharing Applications

The FTC filed a complaint in the Florida federal district court claiming that, starting in 2007, Frostwire LLC distributed file sharing software for desktop and laptop computers and mobile devices, including smartphones, running the Android operating system. Frostwire disseminated the applications free of charge through its own and third-party websites. Computers running a FrostWire application were able to search for and copy ("share") files from each other within a peer-to-peer ("P2P") network. The applications used the Gnutella network protocol, which allowed computers running compatible programs to connect to the Gnutella P2P network, which consisted millions of computers worldwide. "Once installed, the Frostwire applications allow potentially millions of people throughout the world to copy files from a user’s computer with little or no notice to that user at the time the files are shared." ("Peer-to-Peer File-Sharing Software Developer Settles FTC Charges," FTC Press Release, Oct. 11, 2011.) The FTC alleged that the FrostWire applications were likely to cause many users to unknowingly share personal files stored on their devices, such as photos, videos, music, and documents, with other users, and that Frostwire misrepresented that files downloaded from the network would not be shared with the public, in violation of the FTC Act, 15 U.S.C. § 45(a). According to the FTC's complaint, the desktop application was set by default to publicly share files because the "Share Finished Downloads" box was pre-checked. Users were presented with a confusing array of configuration choices, which also were misleading. For example, the application created "Save" and "Share" folders, and gave the impression that files in the "Save" folder, including those downloaded from the network, would not be shared on the network, when in fact they were. This occurred for previously downloaded files even if the user later changed the settings to prevent newly downloaded files from being shared. The mobile application was configured by default to share pre-existing files on the device immediately upon installation and set-up, with no notice to the user. Files could be shared through any WiFi network such as a caf

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