Zango Accused of Violating FTC Agreement; Company Denies Allegations

By Susan J. Campbell

TMCnet Contributing Editor

 

Any computer user knows how annoying pop-up ads can be, not to mention the potential virus and security risks they present. However, when a company launches a product that is designed to install and hide on your computer in order to facilitate consistent pop-up ads, it hardly seems as though that company would find favor with the consumer base.

The company in reference is Zango, the adware company once known as 180solutions, Inc. According to spyware researcher Ben Edelman, Zango is distributing deceptive software without adequate consent or disclosure, which violates the company’s agreement with the Federal Trade Commission (FTC).

In a Tuesday report, Edelman said, “In my hands-on testing, Zango continues numerous practices likely to confuse, deceive, or otherwise harm typical users as well as practices specifically contrary to Zango’s obligations under its November 2006 settlement with the FTC.”

Last year, the FTC charged that Zango had “used unfair and deceptive methods to download adware and obstruct consumers from removing it, in violation of federal law." The company settled these charges in which the FTC alleged that the company used third-party affiliates to install adware on consumers’ computers to display pop-up ads without adequate notice and, at times, through security exploits. The FTC also claimed that Zango made its software deliberately difficult to find and remove.

In denying Edelman’s claims, Zango representatives noted that some of the software the spyware academic analyzes is not covered by the consent order. For those that are covered, Ken McGraw, Zango’s executive vice president, insists that Edelman manipulates the screen shots.

Richard Purcell, CEO of the Corporate Privacy Group and a consultant who certified Zango’s consent order compliance to the FTC, acknowledged that the software covered under the agreement is Zango’s Search Assistant and Toolbar software. Purcell highlighted that Edelman is referring to Hotbar, which is specifically called out as not being part of the settlement.

While Zango CEO Keith Smith insists that his company’s pop-up ads differ from all others, Edelman points out that the ongoing Zango-designed installation sequences which install Zango pop-up ad software without providing on-screen disclosure of material terms and other pop-up ads is in direct violation of the FTC settlement requirements.

Edelman also charges in his report that Zango camouflages adware to look like Windows dialog boxes. “The Zango popup substantially matches the fonts, background color, 'attention' icon, and button labeling and placement of standard Windows MsgBox() dialog boxes,” Edelman said in his report.

“As a result, many users are likely to mistakenly conclude that this window comes from software already installed on their computers -- without realizing, at least initially, that the window is actually an advertisement from a company with which the user has no preexisting relationship,” Edelman said.

 
While Zango is curious as to Edelman’s motives in his investigation, they are quick to point out that he does benefit commercially from such reports. Company representatives have highlighted that, as a paid consultant in litigation against Zango, Edelman uses this reports to garner extra fees from his client base.

Edelman isn’t the only one who stands to gain financially. Such an incentive can be inferred from Zango’s decision to sue security company PC Tools Limited, which created a program called Spyware Doctor that is specifically designed to uninstall Zango’s software.

The judge in this case noted that Zango would likely emerge the loser in this suit by being found guilty of tortuous interference, trade libel or violations of the Washington Consumers Protection Act. The judge considered PC Tools’ classification of Zango’s software as something a consumer would want to remove as reasonable, especially based on Zango’s past conduct and other companies’ assessment of its software.

 

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