The Federal Trade Commission (FTC) charged ERG in November 2006 with violating the FTC Act by tricking consumers into downloading malware.
The settlement bars the organization from downloading software onto PCs without disclosing its function and obtaining customer consent.
The FTC alleged that ERG hid Media Motor, a program known to slow PC use, among screensavers and video files. The malware had been downloaded onto 15 million computers, according to the agency.
Media Motor was found to change end-users' homepages and browser settings, track browsing and disable anti-virus and anti-spyware software, according to the FTC.
ERG and its principals were alleged to have failed to disclose that their free software was bundled with malware, as well as to have used a deceptive end-user license agreement.
A U.S. District Court in Nevada froze ERG's assets and ordered a halt to the spyware operation pending trial.
If the court finds that ERG misrepresented its financial status, the company will owe nearly $3.6 million.
The FTC, which credited Microsoft with assisting the agency, voted to accept the settlement by a 5-0 vote.
Contact information for ERG could not be obtained.
Eric Howes, director of malware research at Sunbelt Software, told SCMagazineUS.com today that Media Motor, which was most popular in late 2005 and early 2006, was done in by press attention paid to the widespread Windows metafile exploit.
“That exploit got so much press attention, and the press was actually naming the companies using the exploit," he said. "It was right at the end of January  that a lot of these companies doing mass adware installs just disappeared."
Howes noted that the amount of money agreed to in the settlement, $330,000, is significantly lower than the $3.6 million the company made.
“They're essentially going to let these guys walk away with that, unless they've misrepresented their mass wealth,” he said.