The Center for Democracy and Technology has issued a sensible and accessible paper about the spyware problem and associated policy issues.
Spyware is software, installed on your computer without your consent, that gathers information about what you do on your computer. It’s shockingly common – if you are a typical active web surfer using Internet Explorer in its default configuration, and you haven’t been taking specific steps to protect yourself against spyware, then you probably have several spyware programs on your computer right now.
CDT recommends that end users protect themselves by using anti-spyware tools such as AdAware, Spybot Search and Destroy, Spyware Eliminator, or BPS Spyware/Adware Remover. (I have had good luck with Spybot Search and Destroy.)
At the policy level, CDT is lukewarm about attempts to ban spyware specifically, because of the difficult line-drawing exercise involved in distinguishing spyware from certain types of legitimate programs. They argue instead for policies that address the underlying problems: installation without consent, and surreptitious monitoring of user behavior.
Kudos to CDT for advancing the policy discussion on this often overlooked issue.