Search »

Zango to Pay $3 Million, Settles FTC Charges

The former 180solutions, one of the world’s largest distributors of adware, and its two principals have agreed to settle Federal Trade Commission charges that they used unfair and deceptive methods to get consumers to download adware and then obstructed their efforts to remove it.

Zango’s settlement with the FTC bars future downloads of Zango’s adware without consumers’ consent, requires Zango to provide a way for consumers to remove the adware, and requires the company to give up $3 million “in ill-gotten gains,” the FTC announced. The FTC complaint named Zango and its principals, Keith Smith and Daniel Todd - all based in Bellevue, Washington. The settlement does not constitute an admission by Zango that it violated the law, writes MarketingVox.

“In announcing a settlement agreement with Zango, the Federal Trade Commission (FTC) today established standards for the online downloadable software industry and, most importantly, provided online consumers with a new and higher level of protection. Zango has met or exceeded the key notice and consent standards detailed in the FTC consent order since at least January 1, 2006,” Zango said in a statement.

The FTC charged that Zango’s failure to disclose that downloading the free content and software would result in installation of the adware was deceptive, and that its failure to provide consumers with a reasonable and effective means to identify, locate and remove the adware from their computers was unfair, in violation of the FTC Act.

“Early in our business, and as we’ve acknowledged, we relied too heavily on our affiliates to enforce our consumer notice and consent policies. Unfortunately, this allowed deceptive third parties to exploit our system to the detriment of consumers, our advertisers and our publishing partners. We deeply regret and apologize for the resulting negative impact,” said Keith Smith, CEO of Zango.

“The FTC’s leadership in providing clarity around best practices is a welcome and significant step forward for Zango and our industry. We embrace the new standards and will continue to create, abide by and strive for best practices that protect consumers,” Smith said.

The settlement also…

* Bars Zango from using its adware to communicate with consumers’ computers - either by monitoring consumers’ web surfing activities or delivering pop-up ads - without verifying that consumers consented to installation of the adware.

* Bars Zango, directly or through others, from exploiting security vulnerabilities to download software, and requires that it give clear and prominent disclosures and obtain consumers’ express consent before downloading software onto consumers’ computers.

* Requires that Zango identify its ads and establish, implement and maintain user-friendly mechanisms consumers can use to complain, stop its pop-ups and uninstall its adware.

* Requires that Zango monitor its third-party distributors to assure that its affiliates and their sub-affiliates comply with the FTC order.

The settlement contains standard record keeping provisions to allow the FTC to monitor compliance.

The agreement will be subject to public comment for 30 days, beginning today and continuing through December 5, after which the Commission will decide whether to make it final.

Related stories: