New York State Attorney General Andrew Cuomo announced the agreement on Monday noting that the agreements (PDF) with the three companies marked the first time law enforcement has held advertisers responsible for using an agency that distributes adware.
"Advertisers will now be held responsible when their ads end up on consumers' computers without full notice and consent," Cuomo said in a prepared statement. "Advertisers can no longer insulate themselves from liability by turning a blind eye to how their advertisements are delivered, or by placing ads through intermediaries, such as media buyers."
The state's new top prosecutor said New Yorkers "have suffered enough with unwanted adware programs." New York State filed a lawsuit last year claiming that online media company Direct Revenue installed adware programs onto millions of computers to deliver ads, monitor Web use and collect data without notifying consumers or gaining their consent.
The investigation into that case showed that Priceline, Travelocity and Cingular were among several companies that had sent ads through Direct Revenue's software, Cuomo said. The adware collected information, including data that people typed while using their computers.
The adware settlement requires the companies to notify consumers about their adware and any related software. It also states that companies will explain the software and obtain consent before it runs on people's computers. The settlement requires companies to obtain consent to distribute ads to legacy users, display brand names and logos prominently, and make the software easier to remove.
Priceline, Travelocity and Cingular agreed to exercise due diligence in choosing and monitoring the companies that distribute their ads. They also agreed to stop using adware that violates the terms of the agreement. Finally, Priceline and Cingular will pay $35,000, while Travelocity will pay $30,000, for penalties and investigatory costs.
The agreement states that Priceline had already adopted best practices when New York investigators contacted the company, and it stopped using adware. Still, investigators pursued the company, alleging it used deceptive practices in the past. Priceline entered into the agreement without admitting the charges of using deceptive practices. The settlement put an end to a lawsuit. A Priceline representative said the company "fully supports" Cuomo's position on adware.
"Priceline has not utilized any adware providers since the end of February 2006," Priceline's Vice President of Communications Brian Ek said during an interview Tuesday. "Further, in April, 2006, Priceline enacted an adware policy that meets all of the A.G.'s requirements and that policy is published on our website."
Travelocity used a Direct Revenue ad system deemed compliant with best practices but failed to follow up on complaints against the adware distributor and stop the use of previously installed programs, according to statements in the settlement. New York alleges that Travelocity engaged in deceptive practices, but the company did not admit guilt in the settlement it signed in order to avoid a lawsuit. Travelocity stopped using Direct Revenue in 2006.
Travelocity issued a statement saying that the company fully cooperated to reach the settlement and has adopted guidelines posted on an industry Web site.
"We comply with our industry's strict adware guidelines," Joel Frey, a Travelocity spokesperson, explained in an e-mail.
Cingular stopped using Direct Revenue's ads in October 2005, according to the settlement, and did not admit to allegations it had engaged in deceptive practices. Mark Siegel, a spokesman for Cingular, said Tuesday that the company no longer uses adware.
"We're in complete agreement with the language of this settlement," he said. "It must be in the consumers' hands to decide if they want to experience the pop-up ads and that adware generates, and, if they change their minds, to turn off the adware quickly and easily. No question about it."
Editor's note: This story was expanded at 3:30 p.m. to add responses from Travelocity and Cingular.