The settlement with Advertising.com, which is now part of
America Online Inc., does not require the payment of damages, only
a promise that future downloads will clearly and prominently
disclose any inclusion of adware.
The FTC began a crackdown on spyware and adware last spring.
Spyware is the term for software that is used to collect
information about an individual or organisation without their
knowledge. Often malicious in nature, it can be deposited as an
e-mail attachment or as a website download and used to harvest
passwords or other confidential data. Adware tends to be less
malicious, generating adverts matched to browsing habits; but it
can still be an invasion of privacy and a great annoyance for
users.
The FTC began investigating Advertising.com after concerns were
raised about its marketing in 2003 of free security software called
SpyBlast.
The regulator charged that the company and its co-founder, John
Ferber, distributed online ads warning that because a viewer's
computer was broadcasting an internet IP address, it was at risk
from hackers.
Consumers who clicked on an ad were shown an ActiveX “security
warning” installation box, with a hyperlink describing SpyBlast as
“Personal Computer Security and Protection Software from
unauthorised users” and telling them, “once you agree to the
License Terms and Privacy policy – click YES to continue.”
The link did not indicate the nature and significance of the
terms of the licensing agreement – namely that adware would be
installed on their computers. Consumers were not required to read
the agreement before installing the software.
If consumers had read the agreement, they might have seen a
statement explaining that by accepting the software, they agreed to
receive marketing messages, including pop-up ads, based on their
internet browsing habits, according to the FTC.
The FTC said the adware bundled with SpyBlast collected
information about consumers, including the URLs of pages they
visited, and used this information to send targeted
advertisements.
The complaint charged that in representing SpyBlast as an
internet security program, the respondents did not adequately
disclose that SpyBlast included adware that caused consumers to
receive pop-up ads.
It considered that the presence of the bundled adware would be
material to consumers deciding whether to install SpyBlast and,
therefore, that the failure to disclose it adequately was
deceptive.
Under the terms of the settlement between the FTC and
Advertising.com, the internet company is now prohibited from making
any representations about SpyBlast or any other program promoted as
security or privacy software, unless any accompanying adware is
clearly and conspicuously disclosed to consumers.
The settlement also requires that the company comply with
standard record keeping and other provisions to allow the
Commission to monitor compliance with the order.
An AOL spokesman told Reuters that Advertising.com had abandoned
its adware business before AOL acquired the company in 2004.
"Advertising.com does not now and will not in the future distribute
adware products,” he said.
