Holding Zango's Feet to the Fire
When the Federal Trade Commission's $3 million settlement with Bellevue-Wash.-based adware distributor Zango Inc. was announced earlier this month, we knew immediately that it had the potential to be a landmark for enforcement in the downloadable software space. The settlement held Zango clearly accountable for the actions of its intermediaries; defined for the first time what it means for a consumer to give "express consent" to receive downloadable software; and prevented the company from contacting potentially millions of people who had received the Zango software surreptitiously. Beyond simply chastising and correcting the behavior of a bad actor, the settlement stands as a signpost for other software distributors as to what is and isn't acceptable in the downloadable space. In formal comments to the FTC today we praised the agency for its work on the settlement, while also sounding a not of concern about Zango's continued activities. In a press release issued on November 3, 2006, Zango claimed that it "has met or exceeded the key notice and consent standards detailed in the FTC consent order since at least January 1, 2006." In its comments to the FTC, CDT provides substantial evidence that that is simply not the case. In particular CDT documents instances in which Zango failed to properly identify the source of its advertisements as recently as November 10. Ben Edelman and Eric Howes, two well-known anti-spyware investigators, also filed comments today. Edelman and Howes document evidence from after the settlement showing even more pervasive compliance failures by Zango. Zango must be made to live up to the terms it reached with the FTC. The settlement is too important to let go to waste. At the FTC's recent "Tech-Ade" conference FTC Commissioner Leibowitz said that the commission would be contacting Zango's advertisers, sending them copies of the settlement and informing them that they had been doing business with a company that had been engaging in questionable practices. This is an excellent step in helping marketers to understand their responsibility for what goes on in the online advertising marketplace. Now the FTC has to make sure that those practices really have ceased. On a related note, CDT Deputy Director Ari Schwartz will be speaking at the National Advertising Initiative's Strategic Forum and will be discussing how to clean up and improve affiliate marketing models.