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December 4th, 2006, 09:02 AM #1FTC Adware Settlement a Landmark for Downloadable Software(1) FTC Adware Settlement a Landmark for Downloadable Software
Earlier this month, the Federal Trade Commission reached a landmark
settlement with Bellevue, Wash.-based adware developer Zango Inc. One
of the largest distributors of adware in the country, Zango has for
many years been associated with a range of highly suspect practices
used to install the Zango software on millions of users' computers.
The settlement not only required Zango to cut its ties to many
consumers who may have received the software surreptitiously, it also
helped to clarify what constitutes acceptable behavior in the
downloadable software space. If properly enforced, the settlement has
the potential to be a landmark for consumers and software
In January, the Center for Democracy & Technology (CDT) filed a
lengthy complaint with the FTC against Zango, which was formerly
known as 180solutions. In the complaint, CDT identified many of the
unfair and deceptive practices Zango and its affiliates employed in
distributing its adware to millions of people over a period of two
The complaint raised concerns that Zango's business model, which
encouraged a network of loosely monitored affiliates to install the
Zango software on as many computers as possible, was perpetuating a
continuous barrage of unfair practices involving Zango software. The
terms of the FTC settlement go to the heart of issues raised in CDT's
More important than the million payment called for under the
settlement, is a requirement that Zango cease communications with
Internet users who downloaded the Zango/180solutions software before
Jan. 1, 2006. Not only does this provide relief for many unwitting
Zango "users," it also sends a message that companies will not be
permitted to retain customer bases built on patterns of unfair
Two other aspects of the settlement could have far-reaching positive
implications for the downloadable software market.
First, the complaint requires that Zango not install software on
users' computers without first obtaining "express consent." As
defined in the settlement, express consent must be clear, contain all
relevant disclosures, and perhaps most importantly, be obtained
separate from the end-user license agreement (EULA). Distributors of
unwanted software often hide their disclosures in EULAs in hopes that
users will simply click through them without reading.
Second, the settlement makes clear that Zango is responsible for the
actions of its affiliates. Too many downloadable software companies,
Zango included, have attempted to disavow bad practices undertaken by
their affiliates on their behalf. This settlement makes clear that
these companies can no longer sit back and claim ignorance as their
affiliates violate the trust of Internet users.
The conditions of the settlement should send a clear message to
adware developers that they must obtain real consent before
installing software on users' computers, and that they cannot turn a
blind eye to the activities of their affiliates. The key now is
ensuring that Zango, which has struggled before with efforts to
reform its practices, actually lives up to its obligations under the
FTC-Zango Documents http://www.ftc.gov/os/caselist/0523130/index.htm
Original CDT Complaint
(2) CDT Urges Aggressive Enforcement of Settlement Terms
A few weeks after the FTC announced its proposed settlement with
Zango, CDT filed comments as part of a public comment period
preceding the commission's final approval of the settlement
agreement. In the comments, CDT praised the commission for its work
on the landmark adware settlement, but also raised concerns that
Zango -- despite its public statements to the contrary -- is still
engaging in some of the same practices that necessitated the
settlement in the first place.
CDT argued that permitting Zango to openly flout the settlement's
terms could undermine its value. CDT further urged the commission to
make clear that it expects Zango to follow the legally binding
settlement to the letter, or face serious consequences.
In a press release issued on November 3, 2006, Zango claimed that it
"has met or exceeded the key notice and consent standards detailed in
the FTC consent order since at least January 1, 2006." In its
comments to the FTC, CDT provided substantial evidence that that is
simply not the case. In particular, CDT documented instances in which
Zango failed to properly identify the source of its advertisements as
recently as November 10.
Ben Edelman and Eric Howes, two well-known anti-spyware investigators
also filed comments. Edelman and Howes documented evidence from after
the settlement showing even more pervasive compliance failures.
CDT has personal direct experience with Zango that begs the question
of whether the company is truly willing -- or even able -- to truly
reform its distribution practices under its current business
structure. For nearly two years CDT held consultations with Zango,
alerting the company to deceptive installation practices by its
affiliates. Although Zango was willing to cut ties with bad
affiliates after the fact, the company repeatedly demonstrated an
unwillingness to change the fundamental aspects of its business model
that led to repeated violations.
Although CDT is hopeful that Zango is serious about living up to its
obligations under the FTC settlement, the commission may have to take
a strict, hands-on approach to ensure the settlement's conditions are
CDT Comments http://www.cdt.org/privacy/20061120comments.pdf
Edelman-Howes Comments http://www.benedelman.org/news/112006-1.html
(3) Downloadable Market Improving With Better Enforcement,
Although many forms of unwanted software continue to tarnish the
Internet experience for millions of users around the world, improved
enforcement, education and technical coordination are helping to
create a safer, more understandable market for downloadable software.
Enforcement actions by the FTC and technology-savvy state attorneys
general, coupled with the coordination and educational efforts of
groups like the Anti-Spyware Coalition and StopBadware.org, have
helped consumers to better protect themselves from threats and have
helped software distributors understand their obligations to users.
For years, many distributors of unwanted adware relied on the newness
of the downloadable software market to exploit the gray areas of
acceptable practices. As anti-spyware companies have worked together
to provide clear definitions of the behaviors associated with
unwanted software, and law enforcers have punished companies that
step over the line, those gray areas have begun to evaporate.
Although there will likely always be adware and spyware scammers who
brazenly violate the law to exploit consumers, it is getting harder
and harder for companies to engage in deceptive activities while
still retaining a sheen of legitimacy. This represents a victory for
those allied in the fight against unwanted adware and spyware.
A critical element of creating a safer, more understandable market
for downloadable software lies in educating legitimate advertisers
about ethical behavior in the adware space. CDT's "Following the
Money" series of reports found that many legitimate, national
companies advertised through Zango even while it was engaged in
deceptive practices. So long as companies that engage in unethical
behaviors continue to be funded by major national brands, they are
likely to continue those behaviors.
The FTC is now poised to take a huge step toward addressing that
problem. At the commission's recent "Tech-ade" hearings, commissioner
Jon Leibowitz announced that the FTC would be contacting advertisers
who had worked with Zango to inform them of the terms of the
settlement. As these advertisers begin to understand some of the
practices undertaken in order to market their brands, hopefully it
will prompt them to take a closer look at their relationships with
adware companies and their affiliates.
Detailed information about online civil liberties issues may be found
at http://www.cdt.org/. This document may be redistributed freely in
full or linked to http://www.cdt.org/publications/policyposts/2006/21
Excerpts may be re-posted with prior permission of firstname.lastname@example.org
Policy Post 12.21 Copyright 2006 Center for Democracy and TechnologyContinued Success,
The secret of success is constancy of purpose ~ Disraeli
December 4th, 2006, 09:32 AM #2
I made another $100 CDT donation just now to say thanks for granting Haiko / ABW permission to post your information here.
Thank you CDT for chasing down schmucks, inciting / pressuring the FTC in productive ways, being receptive to input I've submitted (thanks MC), putting my donations to excellent use, educating our legislators and protecting and championing the consumer.
Go ARI, get them all!
December 4th, 2006, 03:23 PM #3
- Join Date
- January 18th, 2005
Christmas comes early. Wow.
December 4th, 2006, 11:53 PM #4
- Join Date
- January 18th, 2005
- St Clair Shores MI.
Nice to see our Federal Tax dollars actually working to protect Americans when push comes to shove. Hats off the the folks at CDT for their unrelenting research and pressure to muzzle the BHO Adwhores. Infestation isn't a legit strategy game, when played against the trusting mental midgets supposedly in control of their computers. Hopefully the FTC will publically OUT the merchants monitizing Badware of all flavors.Webmaster's... Mike and Charlie
"What have you done today to put real value into a referral click...from a shoppers viewpoint!"
December 5th, 2006, 12:51 AM #5
December 5th, 2006, 07:13 AM #6
Excellent news. Great news to start the day off right.~Ernie
December 5th, 2006, 09:19 AM #7
- Join Date
- January 18th, 2005
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