Facebook takes on 'clickjacking' spammers in court

Facebook and the state of Washington sued a company on Thursday they accused of a practice called "clickjacking" that fools users of the world's top social network into visiting advertising sites, divulging personal information and spreading the scam to friends.

The scheme, also known as "likejacking" because victims are tricked into using Facebook's "Like" button to perpetuate it, has grossed $1.2 million a month for the Delaware-based firm, Adscend Media, according to the state attorney general's office.

Adscend profits from the scam by collecting money from its advertising clients for every Facebook user unwittingly misdirected to a target ad or subscription service, the plaintiffs said.

Two separate but similar claims filed in federal court by the state and Facebook accuse Adscend of violating federal and state statutes outlawing misleading or deceptive commercial electronic communications and unfair business practices.

The legal action is believed to mark the first time any state government has gone to court in a crackdown against spam spread by Facebook, the world's most widely used social media network, said Paula Selis, senior counsel for the attorney general.

She said schemes such as clickjacking have grown steadily more pervasive, and that millions of Facebook users have probably been exposed to Adscend's spam.

"Security is an arms race," Ted Ullyot, Facebook's general counsel, told a news conference at the California-based company's Seattle office to announce the lawsuits. "It's important to stay a step ahead against spammers and scammers."

Attorney General Rob McKenna, a Republican running for governor, said Washington state was taking action because "we've brought other cases like this and, more than any other state, we've developed technological and legal expertise" in the field of cyber fraud.

Representatives of Adscend or two co-owners also named as defendants could not immediately be reached for comment.

PAGES DESIGNED AS BAIT

As described in the lawsuits, the scam works as follows:

Facebook pages designed as "bait" are disseminated to social network users as posts that seemingly originate from friends, offering visitors an opportunity to view salacious or provocative content.

However, that viewing is contingent on completing a series of steps that will supposedly unlock the content but are actually designed to lure Facebook users onto other sites, where they are tricked into giving away personal information or signing up for expensive mobile subscription services.

First the victims are encouraged to click the "Like" button on the Facebook "bait" page, which then alerts their friends to the page's existence, thus helping propagate it. Then they are told they cannot reach the content without filling out a form for an online survey or advertising offer.

In one example cited, the "Like" button is overlayed with a link labeled: "This man took a picture of his face every day for 8 years!" The promised content often does not exist, and the user instead is directed through a series of prompts taking them off Facebook and to a string of ads and subscription offers.

In some cases, a hidden code embedded in an enticing link on the "bait" page activates the "Like" button without the user even clicking it, sending it to friends' news feeds.

Selis said it may seem unlikely that anyone would click on such links, "but unfortunately they do."

While the number of Facebook users actually scammed by clickjacking is not known, Selis said investigators have determined that some 280,000 users visited the locked content pages of Adscend during February 2011 alone.

"So we know there are probably millions of Facebook users" exposed to the deception, she said.

Facebook spokesman Andrew Noyes said the Adscend action was the latest in "our pursuit and support for civil and criminal consequences for spammers or others who attempt to harm Facebook or the people who use our service."

He cited three federal court judgments worth several hundred million dollars each obtained by Facebook against spammers since 2008

Investors in Murdoch's News Corp forgive hacking

After six months of scandal and crisis management in the wake of the phone-hacking affair at its UK tabloid papers, shares of News Corp have touched new heights as investors say the so-called 'Murdoch discount' has shrunk but cautioned that it won't completely go away.
In the year's first week of trading, News Corp shares rose to a 52-week record, surpassing the highs it hit just before the July 4 story broke of its News of the World tabloid hacking a murdered British schoolgirl's voice mail. That story seemingly turned the world against founder Rupert
Murdoch and his family. The media conglomerate lost nearly a quarter of its market capitalization, some $11 billion, in just four weeks.
The fact that all of News Corp's papers account for less than 3 percent of its operating profits did little to allay investors fears at the time.
That attitude has changed now said analysts as News Corp shares are up nearly 30 percent since the lows of last summer.
"The market is reacting to strong fundamentals in this business, they reported pretty strong numbers in their September quarter, and the Murdoch discount is declining," said Collins Stewart analyst Thomas Eagan.
Richard Greenfield, an analyst at BTIG, agrees saying no one owns News Corp for its newspapers, which most on Wall Street see as more trouble than they're worth.
"Investor reaction has been overwhelmed by the how well their core cable networks and TV business are doing."
Indeed the hacking affair, and the manner in which Murdoch initially handled it by sticking by loyal lieutenants who had ultimate responsibility for the issue, appeared to support the idea of a 'Murdoch discount'. The idea is that Murdoch is seen by some to treat the public company which he controls according to his own shareholder-unfriendly whims. Last summer, that growing scepticism led to the widening of the discount, which has always seen News Corp trade at a valuation below peers like Time Warner Inc and Viacom Inc.
"If you can divorce the emotionalism over the hacking thing, this is one hell of a cheap stock," said Lawrence Haverty, fund manager of Gabelli Multimedia Funds, which holds News Corp shares.
News Corp currently trades at around 6.8 times calendar 2012 earnings before interest tax, depreciation and amortization (EBITDA), while its media peers trade between 7.3 to 8.1 times, according to analysts at Collins Stewart. Without the Murdoch discount, News Corp should be trading around 8 times earnings given that it has faster cash flow growth prospects than its peers, said Thomas Eagan at Collins Stewart.
"People are in the process of forgive and forget and saying oh my, here's a wonderful business that's significantly undervalued," said Haverty.
Perhaps one of biggest immediate concerns for News Corp investors at the peak of the hacking scandal last summer was whether the Murdochs would lose control of the company, particularly as Murdoch's younger son James is the top executive at the troubled UK unit.
Ironically, one of the outcomes in the fallout of the scandal is a perception that Murdoch might be voluntarily loosening his grip slightly to allow the rise of his well-respected number two, Chase Carey, something Wall Street and investors have also favored.
The other key concern was whether the scandal would spread to News Corp's U.S. businesses. So far nothing concerning its U.S. companies has come to light.
"It seems the hacking scandal should be compartmentalized, although the Feds were looking into potential infractions on U.S. soil and the possibility that this could fall under the Foreign Corrupt Practices act," said Miller Tabak analyst David Joyce. "I haven't heard anything new on those fronts for months."
However, the key turning point in the wake of the scandal has been News Corp's decision to stand down from its $12 billion bid to buy the 61 percent of the UK satellite TV operator BSkyB which it didn't already own.
That politically expedient decision, in the face of growing UK government opposition, freed up billions of dollars of cash which have now been plowed back into an aggressive $5 billion share buyback program. Since August it has bought back around $2.5 billion of its stock, according to analysts at Miller Tabak.
Investors are already expecting that program to be expanded in fiscal 2013 giving further support to the comeback stock.
Shares closed at $18.30 Friday on the Nasdaq.
(Reporting By Yinka Adegoke; Editing by Bernard Orr)