AOL's Advertising.com settles FTC adware charges
Advertising.com, aka Teknosurf.com, a subsidiary of AOL, has agreed to settle FTC charges of deceptive business practices based on the marketing of its SpyBlast security software without adequate disclosure that it contains adware. The settlement agreement is subject to final FTC approval.
The agreement provides that no representations may be made about the product "unless they disclose, clearly and prominently, that consumers who install the program will receive advertisements, if that is the case."
The FTC's analysis states:
"The proposed order is designed specifically to address the facts of the case at hand. However, the limitation in the proposed order to respondents' software programs whose principal function is to enhance security or privacy should not be read more broadly to suggest that the requirement for clear and prominent disclosure is necessarily limited to those situations. Moreover, the problem here was not the security software that Advertising.com disseminated with its adware. Instead, it was the respondents' practice of downloading software onto users' computers, without adequate notice and consent, that generated repeated pop-up ads as the computer users surfed the Web."
The product's click-thru license agreement did contain disclosure of the adware in its boilerplate, but according to the FTC:
"The hyperlink 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 saying that by accepting the software, they agreed to receive marketing messages, including pop-up ads, based on their Internet browsing habits."
As part of the agreement, the company is required to maintain relevant records for 5 years, and the founder of the company, John Ferber, is required to report his employment particulars to the FTC for the next 10 years.
In 2000 the FTC published a guide regarding deceptive trade practices in the online context that is instructive.
Cathy Kirkman is a partner at Wilson Sonsini Goodrich & Rosati in Palo Alto, California. Her practice focuses on intellectual