[Federal Register Volume 70, Number 152 (Tuesday, August 9, 2005)]
[Notices]
[Pages 46175-46177]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-15684]


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FEDERAL TRADE COMMISSION

[File No. 042-3196]


Advertising.com, Inc., and John Ferber; Analysis of Proposed 
Consent Order To Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed consent agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of Federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint and the terms of the consent order--embodied in the consent 
agreement--that would settle these allegations.

DATES: Comments must be received on or before August 31, 2005.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Advertising.com, Inc., et al., File No. 042 
3196,'' to facilitate the organization of comments. A comment filed in 
paper form should include this reference both in the text and on the 
envelope, and should be mailed or delivered to the following address: 
Federal Trade Commission/Office of the Secretary, Room 135-H, 600 
Pennsylvania Avenue, NW., Washington, DC 20580. Comments containing 
confidential material must be filed in paper form,

[[Page 46176]]

must be clearly labeled ``Confidential,'' and must comply with 
Commission Rule 4.9(c). 16 CFR 4.9(c) (2005).\1\ The FTC is requesting 
that any comment filed in paper form be sent by courier or overnight 
service, if possible, because U.S. postal mail in the Washington area 
and at the Commission is subject to delay due to heightened security 
precautions. Comments that do not contain any nonpublic information may 
instead be filed in electronic form as part of or as an attachment to 
e-mail messages directed to the following e-mail box: 
[email protected].
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    \1\ The comment must be accompanied by an explicit request for 
confidential treatment, including the factual and legal basis for 
the request, and must identify the specific portions of the comment 
to be withheld from the public record. The request will be granted 
or denied by the Commission's General Counsel, consistent with 
applicable law and the public interest. See Commission Rule 4.9(c), 
16 CFR 4.9(c).
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    The FTC Act and other laws the Commission administers permit the 
collection of public comments to consider and use in this proceeding as 
appropriate. All timely and responsive public comments, whether filed 
in paper or electronic form, will be considered by the Commission, and 
will be available to the public on the FTC Web site, to the extent 
practicable, at http://www.ftc.gov. As a matter of discretion, the FTC 
makes every effort to remove home contact information for individuals 
from the public comments it receives before placing those comments on 
the FTC Web site. More information, including routine uses permitted by 
the Privacy Act, may be found in the FTC's privacy policy, at http://www.ftc.gov/ftc/privacy.htm.

FOR FURTHER INFORMATION CONTACT: Thomas B. Pahl (202) 326-2128 or 
Michael Ostheimer (202) 326-2699, Bureau of Consumer Protection, 600 
Pennsylvania Avenue, NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and section 2.34 
of the Commission Rules of Practice, 16 CFR 2.34, notice is hereby 
given that the above-captioned consent agreement containing a consent 
order to cease and desist, having been filed with and accepted, subject 
to final approval, by the Commission, has been placed on the public 
record for a period of thirty (30) days. The following Analysis to Aid 
Public Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for August 3, 2005), on the World Wide Web, at http://www.ftc.gov/os/2005/08/index.htm. A paper copy can be obtained from the FTC Public 
Reference Room, Room 130-H, 600 Pennsylvania Avenue, NW., Washington, 
DC 20580, either in person or by calling (202) 326-2222.
    Public comments are invited, and may be filed with the Commission 
in either paper or electronic form. All comments should be filed as 
prescribed in the ADDRESSES section above, and must be received on or 
before the date specified in the DATES section.

Analysis of Agreement Containing Consent Order To Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing a consent order from Advertising.com, 
Inc. and John Ferber, individually and as an officer of Advertising.com 
(together ``respondents'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for receipt of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) days, the Commission will again review the 
agreement and the comments received, and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.
    Respondents advertised and distributed computer software products, 
including the SpyBlast computer software product, which was advertised 
as an Internet security program. This matter concerns the allegation 
that respondents failed to disclose adequately that SpyBlast included 
adware that caused consumers to receive pop-up advertisements.
    The Commission's complaint alleges that respondents disseminated 
ads for SpyBlast that represented that because a consumer's computer 
was broadcasting an Internet IP address, the computer was at risk from 
hackers. According to the complaint, consumers who clicked on this 
advertisement were shown an ActiveX ``security warning'' installation 
box with a hyperlink describing SpyBlast as ``Personal Computer 
Security and Protection Software from unauthorized users'' and telling 
them ``once you agree to the License Terms and Privacy Policy--click 
YES to continue.'' If a consumer clicked ``Yes,'' the software was 
installed, even if the consumer had not clicked on the hyperlink. Only 
if a consumer clicked on the hyperlink describing SpyBlast as 
``Personal Computer Security and Protection Software from unauthorized 
users'' before clicking ``YES,'' did SpyBlast's End User Licensing 
Agreement (``EULA'') appear. The EULA contained a statement that 
consumers agreed to receive marketing messages, including pop-up ads, 
in exchange for getting SpyBlast.
    The complaint further alleges that SpyBlast could also be 
downloaded directly from the http://www.SpyBlast.com Web site. At the 
very bottom of the www.SpyBlast.com home page, below several hyperlinks 
to download SpyBlast, a small disclosure stating that ``In exchange for 
usage of the SpyBlast software, user agrees to receive * * * offers on 
behalf of SpyBlast's marketing partners'' appeared.
    According to the Commission's complaint, respondents downloaded 
bundled adware onto the computers of consumers who installed SpyBlast. 
The adware collected information about SpyBlast users, including URLs 
of visited pages and the user's IP address, and this information 
allowed respondents to send users advertisements that they believed 
might be of interest to them. Consumers received a substantial number 
of pop-up advertisements as result of respondents' installation of this 
adware onto their computers.
    The complaint alleges that in representing that SpyBlast is an 
Internet security program, respondents failed to disclose adequately 
that SpyBlast included adware that caused consumers to receive pop-up 
advertisements. The complaint further alleges that the presence of the 
bundled adware would have been material to consumers in their decision 
whether to install SpyBlast, and, therefore, that the failure to 
disclose adequately this material fact was a deceptive practice. This 
allegation regarding the disclosure of bundled adware applies general 
Commission law on deception, as enunciated in the Federal Trade 
Commission Policy Statement on Deception, appended to Cliffdale 
Assocs., 103 F.T.C. 110, 174-83 (1984). The application of this law in 
an online context was illustrated in a 2000 FTC Staff Guidance 
Document, Dot Com Disclosures: Information about Online Advertising, 
which is available at http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf.
    The proposed consent order contains provisions designed to prevent 
respondents from engaging in similar acts and practices in the future. 
The proposed order is designed specifically to address the facts of the 
case at hand. However, the limitation in the proposed order to 
respondents' software programs whose principal function is to enhance 
security or privacy should not be read

[[Page 46177]]

more broadly to suggest that the requirement for clear and prominent 
disclosure is necessarily limited to those situations. Moreover, the 
problem here was not the security software that Advertising.com 
disseminated with its adware. Instead, it was the respondents' practice 
of downloading software onto users' computers, without adequate notice 
and consent, that generated repeated pop-up ads as the computer users 
surfed the Web.
    Part I of the proposed order prohibits respondents from making any 
representation about the performance, benefits, efficacy, or features 
of SpyBlast or any of respondents' other executable computer software 
programs whose principal function is to enhance security or privacy, 
unless respondents disclose clearly and conspicuously that consumers 
who install the program will receive advertisements, if that is the 
case.
    Parts II through VI require respondents to keep copies of relevant 
advertisements and materials substantiating claims made in the 
advertisements; to provide copies of the order to certain of their 
personnel; to notify the Commission of changes in corporate structure 
(for the corporate respondents) and changes in employment (for the 
individual respondent) that might affect compliance obligations under 
the order; and to file compliance reports with the Commission. Part VII 
provides that the order will terminate after twenty (20) years under 
certain circumstances.
    The purpose of this analysis is to facilitate public comment on the 
proposed order, and it is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 05-15684 Filed 8-8-05; 8:45 am]
BILLING CODE 6750-01-P