[Federal Register Volume 71, Number 217 (Thursday, November 9, 2006)]
[Notices]
[Pages 65822-65824]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-18912]


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FEDERAL TRADE COMMISSION

[File No. 052 3130]


Zango, Inc., Formerly Kown as 180solutions, Inc.; 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 December 5, 2006.

ADDRESSES: Interested parties are invited to submit written comments. 
Comments should refer to ``Zango, Inc., File No. 052 3130,'' 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

[[Page 65823]]

filed in paper form, 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: David K. Koehler (202-326-3627) or 
Carl H. Settlemyer (202-326-2019), 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 November 3, 2006), on the World Wide Web, at http://www.ftc.gov/os/2006/11/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 proposed 
respondents Zango, Inc., formerly known as 180solutions, Inc. and Keith 
Smith and Daniel Todd, individually and as officers of Zango, Inc. 
(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.

General Allegations

    Respondents develop, market, and distribute via Internet downloads 
advertising software programs (``adware'')--including programs with the 
names n-CASE, 180search Assistant, Seekmo, and Zango--that monitor 
consumers' Internet use in order to display targeted pop-up ads. This 
matter concerns allegations that Respondents: (1) Via a network of 
numerous affiliates and sub-affiliates installed their adware on 
consumers' computers without adequate notice or consent; and (2) made 
their adware difficult for consumers to identify, locate, and remove.
    The Commission's complaint alleges that from at least 2002 through 
2005, the primary way Respondents distributed their adware was through 
a network of affiliates. These affiliates often recruited large numbers 
of third-party sub-affiliates who purported to offer, generally for 
free, some content to the public, such as Internet browser upgrades, 
utilities, games, screensavers, peer-to-peer file sharing software and/
or entertainment content (hereinafter ``lureware'') and bundled the 
adware with that content.
    The Commission's complaint further alleges that consumers often 
have been unaware that Respondents' adware would be installed on their 
computers because it was not adequately disclosed to them that 
downloading the lureware would result in installation of Respondents' 
adware. In some instances, no reference to the adware was made on 
websites offering the lureware or in the install windows. In others, 
information regarding the adware was available only by clicking on 
inconspicuous hyperlinks contained in the install windows or in lengthy 
terms and conditions regarding the lureware. Often the existence and 
information about the effects of Respondents' adware could only be 
ascertained, if at all, by clicking through multiple inconspicuous 
hyperlinks. Other affiliates and sub-affiliates used security exploits 
and drive-by downloads to bypass consumer notice and consent 
completely. The complaint alleges that Respondents knew or should have 
known of their affiliates' and sub-affiliates' widespread failure to 
provide adequate notice of their adware and obtain consumer consent to 
its installation.
    The Commission's complaint further alleges that Respondents, until 
at least mid-2005, made identifying, locating, and removing their 
adware extremely difficult for consumers. Among other things, 
Respondents: installed code on consumers' computers that would enable 
their adware to be reinstalled silently after consumers attempted to 
uninstall or remove it; failed to identify adequately the name or 
source of the adware in pop-up ads so as to enable consumers to locate 
the adware on their computers; named adware files or processes with 
names resembling core systems software or applications and placing 
files in a variety of locations; listed the adware in the Windows Add/
Remove utility under names intended and/or likely to confuse consumers; 
required consumers to have a live Internet connection and download 
additional software from Respondents to uninstall the adware; 
represented to consumers that the adware did not show pop-up ads and/or 
exaggerated the consequences of uninstalling the adware; provided 
uninstall tools that failed to uninstall the adware in whole or part; 
and/or reinstalled the adware files on consumers' computers with 
randomly generated names to avoid further detection and removal.

[[Page 65824]]

Deception Allegation

    The Commission's complaint alleges that by offering content over 
the Internet such as browser upgrades, utilities, games, screensavers, 
peer-to-peer file sharing software and/or entertainment content, 
without disclosing adequately that this content was bundled with 
Respondents' adware, Respondents committed a deceptive practice. The 
bundling of Respondents' adware, which monitors their Internet use and 
causes them to receive pop-up advertisements, would be material to 
consumers in their decision whether to download the other software 
programs and/or content.

Unfairness Allegations

    The Commission's complaint also alleges that it was an unfair 
practice for Respondents to install on consumers' computers, without 
their knowledge or authorization, adware that could not be reasonably 
identified, located, or removed by consumers. In addition, the 
complaint alleges that it was an unfair practice, in and of itself, for 
Respondents not to provide consumers with a reasonable means to 
identify, locate, and remove Respondents' adware from their computers. 
The complaint further alleges that these practices have caused or are 
likely to cause substantial consumer injury by requiring consumers to 
spend substantial time and/or money to locate and remove this adware 
from their computers. The injury to consumers was neither reasonably 
avoided by the consumers themselves, nor outweighed by countervailing 
benefits to consumers or competition.

The Proposed Consent Order

    The proposed consent order contains provisions designed to prevent 
Respondents from engaging in similar acts and practices in the future 
and to halt continuing harm caused by Respondents' prior unlawful 
practices. Part I of the proposed order prohibits Respondents from 
contacting any consumer's computer, to display ads or otherwise, if 
their adware was installed on that computer before January 1, 2006.
    Parts II and III prohibit Respondents from, or assisting others in, 
installing software onto any computer by exploiting security 
vulnerabilities or failing to give adequate notice to consumers, or 
installing any software program or application without express consent. 
``Express consent'' is defined in the proposed order to require clear 
and prominent disclosure of material terms prior to and separate from 
any end user license agreement, and consumer activation of the download 
or installation via clicking a button or a substantially similar 
action.
    Part IV requires Respondents to establish, implement, and maintain 
a clearly disclosed, user-friendly mechanism through which consumers 
can report and Respondents can timely address complaints regarding 
Respondents' practices.
    Part V requires Respondents to establish, implement, and maintain a 
comprehensive program that is reasonably designed to require affiliates 
to obtain express consent before installing Respondents' software onto 
consumers' computers. Part V also contains sub-parts mandating certain 
measures Respondents must take to monitor their distribution network.
    Part VI requires Respondents to identify advertisements served via 
Respondents' adware in order for consumers to easily locate the source 
of the advertisement, easily access Respondents' complaint mechanism, 
and access directions on how to uninstall such adware.
    Part VII requires Respondents to provide reasonable and effective 
means for consumers to uninstall Respondents' adware.
    Part IX requires Respondents to pay $3 million to the Commission 
over the course of a year. In the discretion of the Commission, these 
funds may be used to provide such relief as it determines to be 
reasonably related to Respondents' practices alleged in the complaint, 
and to pay any attendant administrative costs. Such relief may include 
the rescission of contracts, payment of damages, and/or public 
notification respecting such unfair or deceptive practices. If the 
Commission determines, in its sole discretion, that such relief is 
wholly or partially impractical, any funds not used shall be paid to 
the U.S. Treasury.
    Part X requires Respondents to cooperate with the Commission in 
this action or any subsequent investigations related to or associated 
with the transactions or the occurrences that are the subject of the 
Complaint.
    The remaining order provisions govern record retention (Part VIII), 
order distribution (Part XI), ongoing reporting requirements (Parts XII 
and XIII), and filing a compliance report (Part XIV). Part XV 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. E6-18912 Filed 11-8-06; 8:45 am]
BILLING CODE 6750-01-P