WASHINGTON – U.S. regulators said Tuesday that Sony BMG Music Entertainment agreed to reimburse consumers up to $150 for damage to their computers from CDs with hidden anti-piracy software.
According to the Federal Trade Commission, which announced the settlement with the big media company, its anti-piracy software limited the devices on which music could be played to those made by Sony Corp. (SNE) or Microsoft Corp. (MSFT)
It also restricted the number of copies that could be made and monitored consumers' listening habits to send them marketing messages.
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The FTC said the software also "exposed consumers to significant security risks and was unreasonably difficult to uninstall."
The settlement requires the company to allow consumers to exchange through the end of June the affected CDs purchased before Dec. 31, 2006, and reimburse them up to $150 to repair damage done when they tried to remove the software.
It also requires Sony BMG to clearly disclose limitations on consumers' use of music CDs, bars it from using collected information for marketing and prohibits it from installing software without consumer consent.
For two years, Sony BMG also must provide an uninstall tool and patches to repair the security vulnerabilities on consumers' computers and must advertise them on its Web site. The company also is required to publish notices describing the exchange and repair reimbursement programs on its Web site.
Sony BMG did not admit a law violation and the settlement is subject to public comment for 30 days, after which the FTC will decide whether to make it final.
Representatives from New York-based Sony BMG, a joint venture of Sony and Bertelsmann AG, did not immediately return a call for comment Tuesday morning.
In 2005, the company shipped more than 12 million compact discs on 52 Sony BMG titles, each loaded with one of two content protection programs, and about 7 million of those CDs were sold.
The digital rights management software installed itself on consumers' computers without their knowledge or consent.
Last month, the company settled similar cases with more than 40 states, agreeing to pay more than $4 million and to reimburse customers.
Shares of Sony slid 19 cents to $46.80 in morning trading Tuesday on the New York Stock Exchange, where they have traded between $37.24 and $52.29 in the past year.