The $3 million represents what the US consumer regulator said were the "ill-gotten gains" of the installation of adware. Zango, formerly known as 180Solutions, says that it has now changed the way that it works.
The software served pop-up adverts based on the kinds of sites that the user of that computer visited, and is said to have caused 6.9 billion ads to appear, unwanted, on users' computer screens. The software was secretly included along with free internet downloads, such as games or screensavers.
"Consumers' computers belong to them, and they shouldn't have to accept any content they don’t want," said Lydia Parnes, Director of the FTC's Bureau of Consumer Protection. "If consumers choose to receive pop-up ads, so be it. But it violates federal law to secretly install software that forces consumers to get pop-ups that disrupt their computer use."
The FTC settlement orders Zango not to communicate with consumers' computers without explicit permission from them. The company must "give clear and prominent disclosures and obtain consumers’ express consent before downloading software onto consumers’ computers," said an FTC statement.
The settlement also bars the company from serving adverts to any computer on which the software was installed prior to 1st January 2006. After this date the company changed the way it worked, it said.
"This is a landmark settlement, and one that sends an important message to companies that have built their businesses on the backs of internet users without any concern for what those users want," said Ari Schwartz Deputy director of the Centre for Democracy & Technology (CDT), a Washington based lobby group. "With this action, the FTC has again made clear that it is prepared to go after companies, regardless of size or market position, that engage in unfair and deceptive practices to distribute their products."
The settlement makes clear that the obtaining of consent must be separate to the end user licence agreement (EULA). "Distributors of unwanted software often hide their disclosures in EULAs in hopes that users will simply click through them without reading," said a statement from the CDT.
The $3 million fine stands in sharp contrast to the likely situation in the UK should a similar case emerge. "By mentioning adware in a EULA, suppliers are likely to escape criminal penalties under the UK's Computer Misuse Act because it will be difficult to show beyond any reasonable doubt that the installation was unauthorised," said Struan Robertson, a technology lawyer at Pinsent Masons and editor of OUT-LAW.COM. "It may breach the Privacy and Electronic Communications Regulations, though, given that few people will read the EULA."
Robertson continued: "The problem here in the UK is that a breach of these Regulations is little deterrent: all that is likely is that the Information Commissioner will tell the adware supplier not to misbehave in future – and if it does, its worst-case-scenario is a pathetic £5,000 fine."
