Tech Watch | InfoWorld Staff » Adware firm Zango settles for $3M

November 03, 2006 | Comments: (0)

Adware firm Zango settles for $3M

TAGS: Security

Adware firm Zango has settled a suit with the U.S. Federal Trade Commission (FTC) and will pay a $3 million fine, according to an FTC statement.

The company, which was formerly known as 180 Solutions, got into trouble for using sketchy methods to get its adware software installed on computers, often working through shady "affiliates" to distribute the software which would display advertisements from Zango customers.

Under the terms of the agreement, Zango will refrain from installing software without users' consent and forfeit $3 million in what the FTC terms "ill-gotten gains."

"Consumers' computers belong to them, and they shouldn't have to accept any content they don’t want. If consumers choose to receive pop-up ads, so be it. But it violates federal law to secretly install software that forces consumers to get pop-ups that disrupt their computer use, said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection. "
Zango affiliates used deceptive methods to get users to install the adware, such as bundling the wares with screensavers and other enticements, but not disclosing that the adware was part of the package.

Zango distributors are also charged with using third-party distributors exploited security vulnerabilities in Web browsers to install the adware via “drive-by” downloads.

"Millions of consumers received pop-up ads without knowing why, and had their Internet use monitored without their knowledge," FTC said.

The FTC's remedies, in this case, are likely to feed into Zango's PR plans. The company is barred from using its adware to communicate with consumers’ computers without verifying that consumers consented to installation of the adware. Zango also can't exploit security vulnerabilities to download software either directly or through affiliates (Well that's a bold move -- considering that doing so is a felony!). Zango also have to use clear and prominent disclosures and obtain consumers’ express consent before downloading software onto consumers’ computers, identify its ads and establish, implement, and maintain user-friendly mechanisms consumers can use to complain, stop its pop-ups, and uninstall its adware.

Good for the FTC for wringing $3m out of Zango's coffers, but I don't even have to see it to know how Zango will respond: "We've already taken these steps and disavowed the practices mentioned, we have deployed new technology to guarnatee consent, yada yada yada."

This ruling, sadly, is about 3 years too late to make a difference to anyone but Zango's shareholders.

Posted by Paul Roberts on November 3, 2006 08:22 AM

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