In Message to Industry, Government Fines Adware Purveyor $3 Million (Updated)

Government regulators fined rogue adware distributor Zango (formerly 180Solutions) $3 million following charges that the company deceived internet users into installing its pop-up software and tried to prevent them from uninstalling it.

Zango, which bundles its pop-up software with downloads such as screensavers or games, agreed to the Federal Trade Commission settlement, but did not admit guilt.

Zango's practices included using 'rogue' affiliates that would install software without consent from children's sites and kiddie porn sites and randomizing its file names to stymie removal tools, according to spyware researcher Ben Edelman. The settlement prohibits the company from allowing its affiliates to use deceptive practices in the future. (This Wired News story explains how affiliate programs work and how their abuse accounts for much of the internet's email and web spam.)

More including why the settlement affects the entire adware/spyware industry after the jump

The FTC's action follows a formal complaint to the federal watchdog from the Center for Democracy and Technology last January.

The settlement also includes, for the first time, an FTC definition (.pdf) of express consent for downloading. The new definition excludes burying information about bundled adware or spyware deep in end user agreements, a common practice among adware purveyers.

“Express consent” shall mean that, prior to downloading or installing any software program or application to consumers’ computers: (a) Respondents clearly and prominently disclose the material terms of such software program or application prior to the display of, and separate from, any final End User License Agreement; and (b) consumers indicate assent to download or install such software program or application by clicking on a button that is labeled to convey that it will activate the download or installation, or by taking a substantially similar action.

This may actually be the most important part of the settlement, since it telegraphs to others in the industry what standards the FTC will use in further investigations.

Zango proudly announced on its website today that it has "met or exceeded the key notice and consent standards detailed in the FTC consent order since at least January 1, 2006," but deeply regrets allowing "deceptive third parties to exploit our system". Way to go guys.

Updated: Spyware researcher Ben Edelman says he has proof that Zango hasn't really cleaned up its act and that he'll post his proof in the coming weeks.

180 continues plenty of bad practices, including some unlabeled ads, materially misleading installations that fail to disclose key aspects of 180's effects, and installation attempts predicated on security exploits.

I commend the FTC's efforts here, but serious diligence will be required to assure that 180 actually complies with its many obligations under the settlement. At this instant, I am confident that 180 is not in compliance.

Photo: Tritium