Adware Co. Zango Settles With FTC for $3M

Adware distributor Zango will give up US$3 million in "ill-gotten gains" for deceptive downloads that displayed billions of unwanted pop-up ads in a settlement with the U.S. Federal Trade Commission (FTC).

The settlement, announced Friday, bars Zango from loading software onto consumers’ computers without their consent, the FTC said. The settlement also requires Zango, formerly known as 180solutions, to provide a way for consumers to remove the adware. Also named in the settlement were Zango executives Keith Smith and Daniel Todd, of Bellevue, Wash.

"Consumers ... 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."

Zango in a statement released Friday said the settlement establishes standards for software downloads and provides consumers with a "new and higher level of protection." Zango has met or exceeded the settlement’s requirements since Jan. 1, the company said.

The company has hired an independent auditor to monitor its compliance with the FTC settlement, Zango said.

Early in the company’s existence, "we relied too heavily on our affiliates to enforce our consumer notice and consent policies," Smith, the company’s chief executive, said in the statement. The FTC’s actions have provided "clarity around best practices," a welcome step forward for businesses providing downloaded content, he added.

"We deeply regret and apologize for the resulting negative impact,” he said.

The Center for Democracy and Technology (CDT), a consumer and civil rights advocacy group that filed a complaint against Zango in January, applauded the settlement.

"This is a landmark settlement, and one that 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," Ari Schwartz, CDT’s deputy director, said in a statement.

Zango often used third parties to install adware on consumers’ computers, the FTC said. The adware monitored consumers’ Internet use in order to display targeted pop-up ads.

Zango’s software has been installed on U.S. consumers’ computers more than 70 million times and has displayed more than 6.9 billion pop-up ads, the FTC said.

Zango’s third-party distributors often offered consumers free software, such as screensavers, peer-to-peer file-sharing software and games, without saying adware would be included, the FTC said.

In other cases, Zango distributors exploited security vulnerabilities in Web browsers to install the adware. As a result, millions of consumers had their Internet use monitored without their knowledge, the FTC said.

The FTC accused Zango of deliberately making it difficult to locate and remove the adware once it was installed. Zango named its adware files with names resembling those of core systems software, provided uninstall tools that failed to uninstall the adware, gave confusing labels to those uninstall tools, and installed code on consumers’ computers that would enable the adware to be reinstalled secretly when consumers attempted to remove it, the FTC said.

-Grant Gross, IDG News Service (Washington Bureau)

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Copyright © 2006 IDG Communications, Inc.

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