Adware Firm Zango, FTC Settle for $3M

By Ed Oswald, BetaNews

November 3, 2006, 4:54 PM

Internet advertising firm Zango -- previously known as 180solutions -- has settled with the federal government, agreeing to pay $3 million in fines to settle charges that they used deceived consumers into downloading adware and obstructed them from removing it, in violation of federal law.

However in a statement, the former adware company attempted to shift the blame, saying it depended too much on its affiliates to enforce its policies. Even so, Zango apologized for the negative impact it had on consumers.

The settlement would bar Zango from downloading software onto a consumer's computer without his or her consent and provide clear methods to uninstall it, in addition to the fine. Altogether, the company's software has been installed on computers 70 million times, serving some 3.6 billion popup ads, the FTC alleged.

The FTC also seemed to indicate that it was the third parties that Zango contracted its network out to were the problem, however it also seemed to infer that the company actively participated in the scheme.

"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 decision on the settlement was unanimous, 5-0. However, it does not signal an admission of guilt or violation of law, Zango pointed out.

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

It said the FTC's current standards reflect Zango's current business practices.

Zango, then 180solutions, sued security company Zone Labs in December of last year accusing it of hurting its business through removing its software and posting "misleading statements about 180's products that are contained in the ZoneAlarm product have caused certain content vendors to refuse to contract with 180, harming 180's business and subscribers."

But the company came under increased scrutiny and criticism following the move, and announced plans to clean up its act by mid-month. By the end of January, Zango dropped the lawsuit, without providing any reasoning.

Zango was created in a June merger of both 180solutions and fellow adware company Hotbar.