RealTime IT News

Zango Settles FTC Adware Charges

Controversial adware distributor Zango agreed today to return $3 million in "ill-gotten gains" to settle Federal Trade Commission (FTC) charges of unfair and deceptive practices.

The Bellevue, Wash.-based company, formerly known as 180solutions, also agreed not to download its adware without consumers' consent and to provide consumers with a way to remove the adware from their computers.

According to FTC, Zango used third party affiliates offering free software such as screensavers, games and utilities to install Zango adware on consumers' computers, often without their consent.

The FTC said Zango adware has been installed on more than 70 million computers, generating almost seven billion unsolicited pop-up ads. In addition, Zango "deliberately made it difficult" to identify, locate and remove the adware once it was installed.

"Consumers' computers belong to them, and they shouldn't have to accept any content they don't want," Lydia Parnes, director of the FTC's Bureau of Consumer Protection, said in a statement.

"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."

The FTC complaint also claims Zango's third-party distributors engaged in "drive-by" downloads by exploiting security vulnerabilities in Web browsers.

Zango published a statement on the company's blog stressing the settlement was not an admission of guilt, noting that Zango has met or exceeded the notice and consent standards detailed in the FTC consent order since at least January.

"Early in our business, and as we've acknowledged, we relied too heavily on our affiliates to enforce our consumer notice and consent policies," Zango CEO Keith Smith said on the blog. "Unfortunately, this allowed deceptive third parties to exploit our system to the detriment of consumers, our advertisers and our publishing partners."

Smith added that the standards established in today's settlement provides best practices clarity for the download software industry.

Ari Schwartz, deputy director of the Center for Democracy and Technology and author of the original Zango FTC complaint, called the deal a landmark settlement.

In a statement, he said the settlement "sends an important message to companies that have built their businesses on the backs of Internet users without any concern for what those users want."

Zango said it has "retired" its previous adware products and over the last 10 months consumers downloading its software receive a "fully and conspicuously disclosed, plain-language notice and consent process."

Zango's attorney, former FTC Commissioner Christine Varney, said the company fully cooperated with the FTC investigation, providing the agency with than one million documents.

"The new standards outlined today by the FTC reflect Zango's current business practices. The industry now has standards for the downloading of software and applications over the Internet, which it should adopt," she said on the Zango blog.

The settlement also requires Zango to monitor its third-party distributors to assure that its affiliates and their sub-affiliates comply with the FTC order.

Zango has hired Richard Purcell, CEO of the Corporate Privacy Group and the former chief privacy officer at Microsoft, to audit the company's compliance against each of the FTC's settlement requirements.