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11/20/2006
06:32 PM
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Zango Accused of Ongoing Deception Despite FTC Settlement

Spyware researcher Ben Edelman says Zango is violating the terms of its $3 million settlement with the Federal Trade Commission over charges of deceptive trade practices.

Earlier this month, the Federal Trade Commission announced plans to settle charges of deceptive trade practices against adware distributor Zango, formerly known as 180solutions, for $3 million. But spyware researcher Ben Edelman said at the time that Zango wasn't abiding by the terms of the settlement.

Today, Edelman published a report detailing the basis for his assertion. "Despite Zango's claim, we continue to find ongoing installations of Zango's software that fall far short of the proposed settlement's burdens, requirements, and standards," his report says.

Edelman's report accuses Zango of failing to properly disclose material terms of its End User License Agreement in prominent places, as dictated by the settlement; omitting facts that might affect a consumer's decision to install Zango's software; unclear disclosure practices; offering some disclosures only after installation or not at all; unlabelled advertising; and other deceptive practices.

Zango claimed to have turned over a new leaf. In a statement issued on Nov. 3 in conjunction with the settlement announcement, Keith Smith, CEO of Zango, apologized for his company's actions and blamed its troubles on unscrupulous affiliates. "The FTC's leadership in providing clarity around best practices is a welcome and significant step forward for Zango and our industry," said Smith. "We embrace the new standards and will continue to create, abide by, and strive for best practices that protect consumers."

As far as Edelman is concerned, Zango's practices aren't among the best. "[Zango's] improper practices remain remarkably easy to find, and we have numerous additional recent examples on file," his report says. "Moreover, these problems are sufficiently serious that they cast doubt on the efficacy and viability of the FTC's proposed settlement as well as Zango's ability to meet the requirements of the settlement."

The Center for Democracy & Technology expressed similar concern in a letter to the FTC released on Monday. The online civil liberties group wants Zango to rescind its Nov. 3 press release and issue a retraction. "This is the best way to bring Zango's rhetoric in line with its actions and to alert Zango to the fact that deception will not be tolerated," explained deputy director Ari Schwartz and policy analyst Alissa Cooper. The letter also urges the FTC to monitor Zango more closely.

FTC attorney Carl Settlemyer says that the agency is aware of Edelman's claims and doesn't have any comment at this time. The FTC's settlement agreement with Zango hasn't been finalized and remains open to public comment until Dec. 5.

Zango said in a statement that it's reviewing Edelman's information and that it welcomes input into its business practices. "We are working diligently to meet and exceed every single one of the requirements set forth by the FTC," the company said.

Zango has engaged Richard Purcell, CEO of the Corporate Privacy Group, to audit Zango's compliance, and said a report on his findings will be released in the next few weeks.

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