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-----Original Message-----
From: [log in to unmask]
[mailto:[log in to unmask]] On Behalf Of CDT
Info
Sent: 30 November 2006 21:27
To: [log in to unmask]
Cc: CDT Policy Posts
Subject: Policy Post 12.21: FTC Adware Settlement a Landmark for
Downloadable Software
A Briefing On Public Policy Issues Affecting Civil Liberties Online
from The Center For Democracy and Technology
(1) FTC Adware Settlement a Landmark for Downloadable Software
(2) CDT Urges Aggressive Enforcement of Settlement Terms
(3) Downloadable Market Improving With Better Enforcement, Coordination
______________________________________________________
(1) FTC Adware Settlement a Landmark for Downloadable Software
Earlier this month, the Federal Trade Commission reached a landmark
settlement with Bellevue, Wash.-based adware developer Zango Inc. One of
the largest distributors of adware in the country, Zango has for many
years been associated with a range of highly suspect practices used to
install the Zango software on millions of users' computers. The
settlement not only required Zango to cut its ties to many consumers who
may have received the software surreptitiously, it also helped to
clarify what constitutes acceptable behavior in the downloadable
software space. If properly enforced, the settlement has the potential
to be a landmark for consumers and software distributors alike.
In January, the Center for Democracy & Technology (CDT) filed a lengthy
complaint with the FTC against Zango, which was formerly known as
180solutions. In the complaint, CDT identified many of the unfair and
deceptive practices Zango and its affiliates employed in distributing
its adware to millions of people over a period of two years.
The complaint raised concerns that Zango's business model, which
encouraged a network of loosely monitored affiliates to install the
Zango software on as many computers as possible, was perpetuating a
continuous barrage of unfair practices involving Zango software. The
terms of the FTC settlement go to the heart of issues raised in CDT's
original complaint.
More important than the $3 million payment called for under the
settlement, is a requirement that Zango cease communications with
Internet users who downloaded the Zango/180solutions software before
Jan. 1, 2006. Not only does this provide relief for many unwitting Zango
"users," it also sends a message that companies will not be permitted to
retain customer bases built on patterns of unfair practices.
Two other aspects of the settlement could have far-reaching positive
implications for the downloadable software market.
First, the complaint requires that Zango not install software on users'
computers without first obtaining "express consent." As defined in the
settlement, express consent must be clear, contain all relevant
disclosures, and perhaps most importantly, be obtained separate from the
end-user license agreement (EULA). Distributors of unwanted software
often hide their disclosures in EULAs in hopes that users will simply
click through them without reading.
Second, the settlement makes clear that Zango is responsible for the
actions of its affiliates. Too many downloadable software companies,
Zango included, have attempted to disavow bad practices undertaken by
their affiliates on their behalf. This settlement makes clear that these
companies can no longer sit back and claim ignorance as their affiliates
violate the trust of Internet users.
The conditions of the settlement should send a clear message to adware
developers that they must obtain real consent before installing software
on users' computers, and that they cannot turn a blind eye to the
activities of their affiliates. The key now is ensuring that Zango,
which has struggled before with efforts to reform its practices,
actually lives up to its obligations under the settlement.
FTC-Zango Documents
http://www.ftc.gov/os/caselist/0523130/index.htm
Original CDT Complaint
http://www.cdt.org/privacy/20060123180complaint.pdf
______________________________________________________
(2) CDT Urges Aggressive Enforcement of Settlement Terms
A few weeks after the FTC announced its proposed settlement with Zango,
CDT filed comments as part of a public comment period preceding the
commission's final approval of the settlement agreement. In the
comments, CDT praised the commission for its work on the landmark adware
settlement, but also raised concerns that Zango -- despite its public
statements to the contrary -- is still engaging in some of the same
practices that necessitated the settlement in the first place.
CDT argued that permitting Zango to openly flout the settlement's terms
could undermine its value. CDT further urged the commission to make
clear that it expects Zango to follow the legally binding settlement to
the letter, or face serious consequences.
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." In its comments
to the FTC, CDT provided substantial evidence that that is simply not
the case. In particular, CDT documented instances in which Zango failed
to properly identify the source of its advertisements as recently as
November 10.
Ben Edelman and Eric Howes, two well-known anti-spyware investigators
also filed comments. Edelman and Howes documented evidence from after
the settlement showing even more pervasive compliance failures.
CDT has personal direct experience with Zango that begs the question of
whether the company is truly willing -- or even able -- to truly reform
its distribution practices under its current business structure. For
nearly two years CDT held consultations with Zango, alerting the company
to deceptive installation practices by its affiliates. Although Zango
was willing to cut ties with bad affiliates after the fact, the company
repeatedly demonstrated an unwillingness to change the fundamental
aspects of its business model that led to repeated violations.
Although CDT is hopeful that Zango is serious about living up to its
obligations under the FTC settlement, the commission may have to take a
strict, hands-on approach to ensure the settlement's conditions are met.
CDT Comments
http://www.cdt.org/privacy/20061120comments.pdf
Edelman-Howes Comments
http://www.benedelman.org/news/112006-1.html
______________________________________________________
(3) Downloadable Market Improving With Better Enforcement, Coordination
Although many forms of unwanted software continue to tarnish the
Internet experience for millions of users around the world, improved
enforcement, education and technical coordination are helping to create
a safer, more understandable market for downloadable software.
Enforcement actions by the FTC and technology-savvy state attorneys
general, coupled with the coordination and educational efforts of groups
like the Anti-Spyware Coalition and StopBadware.org, have helped
consumers to better protect themselves from threats and have helped
software distributors understand their obligations to users.
For years, many distributors of unwanted adware relied on the newness of
the downloadable software market to exploit the gray areas of acceptable
practices. As anti-spyware companies have worked together to provide
clear definitions of the behaviors associated with unwanted software,
and law enforcers have punished companies that step over the line, those
gray areas have begun to evaporate. Although there will likely always
be adware and spyware scammers who brazenly violate the law to exploit
consumers, it is getting harder and harder for companies to engage in
deceptive activities while still retaining a sheen of legitimacy. This
represents a victory for those allied in the fight against unwanted
adware and spyware.
A critical element of creating a safer, more understandable market for
downloadable software lies in educating legitimate advertisers about
ethical behavior in the adware space. CDT's "Following the Money" series
of reports found that many legitimate, national companies advertised
through Zango even while it was engaged in deceptive practices. So long
as companies that engage in unethical behaviors continue to be funded by
major national brands, they are likely to continue those behaviors.
The FTC is now poised to take a huge step toward addressing that
problem. At the commission's recent "Tech-ade" hearings, commissioner
Jon Leibowitz announced that the FTC would be contacting advertisers who
had worked with Zango to inform them of the terms of the settlement. As
these advertisers begin to understand some of the practices undertaken
in order to market their brands, hopefully it will prompt them to take a
closer look at their relationships with adware companies and their
affiliates.
_______________________________________________
Detailed information about online civil liberties issues may be
found at http://www.cdt.org/.
This document may be redistributed freely in full or linked to
http://www.cdt.org/publications/policyposts/2006/21
Excerpts may be re-posted with prior permission of [log in to unmask]
Policy Post 12.21 Copyright 2006 Center for Democracy and Technology
_______________________________________________
http://www.cdt.org/mailman/listinfo/policy-posts
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