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Travel Companies, Cingular Settle Adware Case

UPDATED: Three online advertisers have to pony up $100,000 and promise to stop using controversial adware as part of a settlement with New York State's Attorney General.

Priceline , Travelocity, and Cingular Wireless (now part of AT&T ) agreed to pay $35,000, $30,000, and $35,000 respectively, Andrew Cuomo, the state’s top law enforcement official, said in a statement.

The companies also agreed to follow the AG office's requirements for adware, software downloaded by computer users that displays advertising.

Among the requirements: providing full disclosure of the adware when downloaded, obtaining consumer consent and offering practical ways to remove the ads.

The companies must also stop using any adware companies that violate the policy and ensure they learn how online ads will be delivered in the future.

"Advertisers can no longer insulate themselves from liability by turning a blind eye to how their advertisements are delivered," Cuomo said.

The settlement is an outgrowth of the office's Internet Bureau investigation of Direct Revenue, a New York City-based adware provider sued last year by former New York Attorney General (and now New York's Governor) Eliot Spitzer.

The Spitzer lawsuit claimed Direct Revenue used spyware to deliver ads, a charge the company called baseless.

Although Direct Revenue did not respond to questions, the three companies named in the settlement say they stopped using the adware provider soon after the lawsuit.

Cingular said it stopped using adware after finding out that Direct Revenue wasn't upholding its pledge to gain consumer consent, spokesman Mark Siegal told internetnews.com. "We couldn't agree more with the Attorney General. Control needs to be in the hands of consumers."

On its site, Direct Revenue provides computer users instructions on how to remove the adware.

Travel site Priceline.com stopped using adware in February 2006 and shifted its online advertising budget to e-mail and search engines, spokesperson Brian Ek said. Travelocity said it terminated its relationship with Direct Revenue in early 2006.

Ari Schwartz, deputy director of the Center for Democracy and Technology, a Washington, DC- based consumer advocacy group, said in a statement: "The dirty secret about unwanted adware is that many legitimate companies -- knowingly or not -- fund its proliferation with their advertising dollars."