Sony Settles With FTC

Sony BMG Music has announced a settlement with the Federal Trade Commission over charges stemming from digital rights management software hidden on their music CDs. The software installed itself on customers’ hard drives without their knowledge and limited the brands of devices on which the music could be played and the number of times it could be copied. It also reported back to Sony on customers’ listening habits so the company could then send targeted advertising to their computers. In addition, the FTC contended that the software left consumers’ computers vulnerable to hackers and was excessively difficult to uninstall.

Sony must now disclose playback limitations on the packaging of their CDs, which may no longer collect information without consumer consent. In addition, the information Sony has already collected with this software may no longer be used to send ads. Customer consent must also be obtained before any software installs itself on their computer. Sony must allow customers to exchange the CDs in question for new ones without the software through June 31, 2007. Sony is also required to compensate consumers for up to $150 of repair damage incurred from attempting to uninstall the software, which Sony must now make easier to uninstall. Furthermore, Sony must provide financial incentives to retailers to return the encrypted CDs.

The FTC voted unanimously to accept the settlement.