Posted By: Margaret Pozzini

By Thomas ClaburnInformationWeekMon Nov 6, 12:00 PM ET

On Friday, the Federal Trade Commission said Zango, a major adware distributor formerly known as 180solutions, and its two principals, Keith Smith and Daniel Toddhad of Bellevue, Wash., agreed to settle FTC charges that the company used unfair and deceptive methods to install and obstruct the removal of adware on consumers' computers in violation of federal law.
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But spyware researcher Ben Edelman doubts that the company has reformed its ways. "I commend the FTC's efforts here, but serious diligence will be required to assure that [the company] actually complies with its many obligations under the settlement," Edelman said in an e-mail on Friday. "At this instant, I am confident that [the company] is not in compliance."

The $3 million settlement forbids Zango from downloading adware without consumers' consent. The agreement includes a prohibition on using security holes to install adware, a practice followed by some of the company's third-party affiliates. The deal won't make adware disappear, but the terms of the agreement require Zango to obtain the informed consent of users before installing any adware.

"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 in a statement. "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."

Zango has a long history of controversial behavior. In 2004, Edelman published a report stating that 180solutions' software improperly manipulated online affiliate payment programs to collect referral commissions for itself and its partners that weren't due.

"[The company] continues plenty of bad practices, including some unlabeled ads and installation attempts predicated on security exploits," said Edelman. "I have the proof, and I expect to post this on my Web site in the coming weeks, subject only to my busy travel schedule."Zango's adware has been installed over 70 million times, according to the FTC. Its adware includes programs such as Zango Search Assistant, 180Search Assistant, Seekmo, and n-CASE. Often installed by third-party affiliates, the software monitors Internet use to display pop-up advertising. To date, the adware has displayed some 6.9 billion pop-up ads.

Efforts to mitigate spyware and adware appear to be having some effect. In 2005, the percentage of home PCs with spyware or adware programs declined from 80% to 61%, according to an AOL/National Cyber Security Alliance Online Safety Study released in December. But the study also found that 81% of home computers lack at least one of the three necessary protections: up-to-date computer virus software, spyware protection, and a secure firewall.

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