TELECOM Digest OnLine - Sorted: Advertising com Settles FTC Adware/Spyware Charges

Advertising com Settles FTC Adware/Spyware Charges

Reuters News Wire (reuters@telecom-digest.org)
Thu, 4 Aug 2005 12:39:17 -0500

An America Online Inc. subsidiary will no longer bundle its anti-spyware
program with software that tracks consumers' online habits and
force-feeds them pop-up ads, the Federal Trade Commission said on
Wednesday.

Advertising.com Inc. also agreed to regular check by the FTC in order
to settle a deceptive-advertising suit filed by the
consumer-protection agency.

Advertising.com, also known as Teknosurf.com, promoted its SpyBlast
program as a way to protect users' computers from "hackers," the FTC
charged. But those who downloaded the product also installed a
separate program that monitored their online behavior and served them
pop-up ads.

Such advertising programs, known as "adware," are considered a form of
spyware by many consumer advocates because consumers typically don't
know they're installing them.

Advertising.com didn't provide consumers with adequate notice that
SpyBlast came bundled with the adware program, the FTC charged.

Advertising.com did not admit or deny guilt as part of the settlement.

AOL, a division of Time Warner Inc. bought Advertising.com for $435
million in June 2004 and understood how Advertising.com's program
worked according to FTC's allegations.

An AOL spokesman said that Advertising.com had only been in the adware
business for a brief period during 2003. The company makes most of its
money by selling banner ads, spokesman Andrew Weinstein said.

"They were not in this business when we purchased them," Weinstein said.
"Advertising.com does not now and will not in the future distribute
adware products." FTC did not agree that "Advertising.com was not in
'that business' when it was purchased by AOL" and contended they were
still in 'that business' anyway. FTC said that "either way, we think
that Advertising.com, and its parent AOL, under the terms of its
supervision by FTC, will definitly be out of 'that business' in the
future. Banner ads are okay, Adware, no more."

The House of Representatives in May voted to stiffen jail sentences and
establish multimillion-dollar fines for spyware purveyors. The Senate
has not yet acted on the bill.

Copyright 2005 Reuters Limited.

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