Tech firm to pay $3.5M in settlement over preloaded software

TRENTON, N.J. — A technology company will pay $3.5 million and change how it sells laptop computers as part of a settlement reached with federal officials and 32 states.

The agreement with Lenovo announced Tuesday settles allegations that the firm, based in Morrisville, North Carolina, sold devices with preloaded software that made users' sensitive personal information vulnerable to hackers.

The VisualDiscovery software was installed on hundreds of thousands of laptops to deliver pop-up ads to consumers.

Lenovo stopped shipping laptops with VisualDiscovery preinstalled in February 2015, but some states contend some laptops with the software still were being sold by retail outlets as late as June 2015.

Under the settlement, Lenovo will now obtain consumers' consent to use the software and provide a reasonable way for them to opt out of it or to disable or remove it.

The Federal Trade Commission said Lenovo "compromised consumers' privacy" when it preloaded the software without their consent or adequate notice.

"This conduct is even more serious because the software compromised online security protections that consumers rely on," acting Federal Trade Commission chair Maureen Ohlhausen said.

Lenovo said Tuesday it "disagrees with the allegations" contained in the complaints about VisualDiscovery, but it said it was pleased to "bring this matter to a close."

The company said it was unaware of any instances of a third party exploiting the vulnerabilities to gain access to a user's communications. It also noted that it stopped preloading VisualDiscovery and worked with antivirus software providers to disable and remove it from consumers' computers after learning of the issues.

The states involved in the settlement are Arizona, Arkansas, California, Colorado, Connecticut, Florida, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Minnesota, Missouri, Nebraska, Nevada, New Hampshire, New Jersey, New York, North Carolina, North Dakota, Oregon, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Texas, Vermont and Washington.

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