Sanctioned Adware Firm Still Rogue, Critics Say: Updated

Rogue adware distributor Zango agreed early this month to stop deceiving internet users into installing its pop-up adware and paid a $3 million fine to government regulators. But the Center for Democracy and Technology, along with internet researcher Ben Edelman, told the Federal Trade Commission today that Zango is violating the settlement by failing to label its ads and allowing its network of distributors to install the software without clear notice to users.

Zango uses a network of affiliates to distribute its software, which would often get bundled with "free" games or screensavers. Often there would be no notice that the adware was included or notice would be deep into 50-something page long End User License Agreements, which the government order said did not count as real disclosure. Zango promised to stop doing so.

The CDT, which filed the original complaint after trying to work with 180 Solutions to clean up its act, had this to say:

Although we are pleased with the terms of the settlement, we are concerned that Zango, even in its press reaction to the settlement, made deceptive statements about its recent behavior. As we suggested in our petition in January 2006, in our experience of working with Zango we have repeatedly found that the company's behavior does not match its rhetoric. In a press release issued on November 3, 2006, Zango claimed that it "has met or exceeded the key notice and consent standards detailed in the FTC consent order since at least January 1, 2006. CDT has seen much evidence to the contrary, and it alarms us that Zango's deceptive ways have continued from the very outset of the announcement of the settlement.

More including links to video proof after the jump...

Ben Edelman, who has video documentation of installations of Zango's software without the explicit notice required by the Federal Trade Commission order, thinks the FTC is in danger of being made a fool of by Zango.

As a first step, we endorse CDT's suggestion that the FTC require Zango to retract its claim of compliance with the proposed settlement. Zango's statement is false, and the FTC should not stand by while Zango mischaracterizes its behavior vis-a-vis the proposed settlement.

More broadly, we believe intensive ongoing monitoring will be required to assure that Zango actually complies with the settlement. We have spent 3+ years following Zango's repeated promises of "reform," and we have first-hand experience with the wide variety of techniques Zango and its partners have used to place software onto users' PCs. Testing these methods requires more than black-letter contracts and agreements; it requires hands-on testing of actual infected PCs and the scores of diverse infection mechanisms Zango's partners devise. To assure that Zango actually complies with the agreement, we think the FTC will need to allocate its investigatory resources accordingly. We've spent approximately roughly 10 hours on the investigations leading to the results above, and we've uncovered these examples as well as various others. With dozens or hundreds of hours, we think we could find many more surviving Zango installations in violation of the proposed settlement's requirements.

Update: Zango sent in this reply Monday:

We are reviewing the information released today. We take concerns relating to the FTC consent order announced earlier this month very seriously and welcome any and all input about our business practices and the protection of consumers. Regarding the Zango consent order, a 30-day public comment period is presently open and will remain open through December 5, 2006.

We are working diligently to meet and exceed every single one of the requirements set forth by the FTC. Additionally, we are fortunate to have a preeminent voice in online safety and privacy issues assisting us in our efforts. Richard Purcell, CEO of the Corporate Privacy Group, has been engaged to audit Zango’s compliance. Richard will report his findings in the next few weeks.

For those of you who don't remember, Purcell is no lightweight. He served as Microsoft's Chief Privacy Officer for many years and currently serves on the Department of Homeland Security's external privacy advisory board.

I also hope to meet with Zango sometime next week.

Photo Illustration: Ryan Singel