It looks like BT thinks it is okay to install spyware on their customers computers.  Nice.

BT has admitted that it secretly used customer data to test Phorm’s advertising targeting technology last summer, and that it covered it up when customers and The Register raised questions over the suspicious redirects.

The national telecoms provider now faces legal action from customers who are angry their web traffic was compromised.

Stephen Mainwaring, a BT Business customer in Weston-super-Mare, believes sensitive banking data relating to his online horse racing business was press-ganged into a trial of an unproven technology. He suffered sleepless nights after detecting the dodgy DNS requests, and said today: “It is very likely that I and others will take legal action against BT for what they did last summer.”

In a statement, BT said: “We conducted a very small scale technical test of a prototype advertising platform on one exchange in June 2007. The test was specifically conducted to evaluate the functional and technical performance of the platform. (Register)

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