Adware maker settles with FTC for $1.5M

Computerworld - Adware distributor Direct Revenue LLC has agreed to pay $1.5 million to settle charges filed by the U.S. Federal Trade Commission (FTC).

The deal, announced Friday, is the second such agreement struck by the FTC with an adware vendor in the last four months. In November, Zango Inc. -- also known as 180solutions -- agreed to pay $3 million to settle similar allegations.

According to the FTC's charges, Direct Revenue and its affiliates installed adware, including programs that produced pop-up ads, on users' machines without properly disclosing what the software would do. In some cases, Direct Revenue affiliates exploited browser security flaws to install adware. The result, said the FTC, was "unfair and deceptive methods to download adware onto consumers' computers and then obstruct them from removing it."

Under the agreement, New York-based Direct Revenue will pay $1.5 million as "ill-gotten gains." The marketing company is also barred from delivering ads to anyone who installed its software before Oct. 1, 2005, unless they respond to specific opt-in messages.

"Direct Revenue is pleased with today's settlement," the company said in a brief statement posted to its Web site.

The dissenting vote in the 4-1 decision by the FTC commissioners was made by Jon Leibowitz, who criticized the size of the settlement. "The $1.5 million in monetary relief that the Commission obtained as part of the consent agreement is a disappointment because it apparently leaves Direct Revenue's owners lining their pockets with more than $20 million from a business model based on deceit," Leibowitz said in his dissent (download PDF). "I would rather go to trial and risk losing than settle for a compromise that makes an FTC action just a cost of doing business."

The settlement statement (download PDF) notes that it "does not constitute an admission that the law has been violated as alleged."

Direct Revenue was sued by then-New York Attorney General Eliot Spitzer in April 2006 for putting pop-up ads on millions of PCs. That case has not yet been decided.