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Advertisers Fined for Deceptive Use of Adware

Priceline, Travelocity, Cingular Wireless Agree to Modify Their Policies

January 30, 2007
New York has reached settlements with three major online advertisers limiting the promotion of products and services on the Internet through deceptively installed programs known as "adware," Attorney General Andrew Cuomo announced.

The agreements, with Priceline.com, Travelocity.com and Cingular Wireless mark the first time law enforcement has held advertisers responsible for ads displayed through adware.

"Advertisers will now be held responsible when their ads end up on consumers' computers without full notice and consent," Cuomo said.

"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. New Yorkers have suffered enough with unwanted adware programs and this agreement goes a long way toward clamping down on this odious practice."

The agreements grew out of the Internet Bureau's investigation of DirectRevenue, LLC. In a lawsuit filed in April 2006, the attorney general alleged that Direct Revenue installed adware programs onto millions of computers worldwide that delivered a steady stream of advertisements, monitored web sites visited by users, and collected data typed into web forms -- without adequate notice or the consent of consumers.

In addition, the adware programs were difficult to remove and consumers who had previously downloaded the company's programs without full notice and consent, known as "legacy users," continued to receive Priceline, Travelocity and Cingular ads through those programs.

The investigation discovered that Priceline, Travelocity and Cingular, among others, spent hundreds of thousands of dollars delivering ads through Direct Revenue software.

The agreements require that each advertiser deliver online ads only through companies that:

• Provide to consumers full disclosure of the name of the applicable adware program and any bundled software;

• Brand each advertisement with a prominent and easily identifiable brand name or icon;

• Fully describe the adware and obtain consumer consent to both download and run the adware;

• Make it practicable for consumers to remove the adware from their computers;

• Obtain consent to continue serving ads to legacy users;

• Require their affiliates to meet all of these same requirements.

The agreements also require Priceline, Travelocity, and Cingular to engage in due diligence with respect to selecting and utilizing adware providers. Prior to contracting with a company to deliver their ads, and quarterly thereafter, the companies must investigate how their online ads are delivered. The companies must immediately cease using adware programs that violate the settlement agreements or their own adware policies.

Under the terms of the agreements, Priceline, Travelocity, and Cingular will pay $35,000, $30,000, and $35,000, respectively, to the State of New York as penalties and investigatory costs.

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