Zango's continued bad practices in light of FTC's proposed settlement terms

Summary:Zango out of compliance with terms in every aspect of FTC proposed settlement per Edelman and Howes. Is the $3 million repayment of ill-gotten gains just a slap on the wrist?

Just over two weeks ago, the FTC announced a proposed settlement with Zango for the complaint filed earlier this year. Under terms of the settlement, Zango is required to give up $3 million in ill-gotten gains and to stop a number of bad practices that have been documented back to 2002. As usual Zango claims innocence, and on November 3 stated on their blog:

Zango has met or exceeded the key notice and consent standards detailed in the FTC consent order since at least January 1, 2006.

Since November 3, Chris Boyd (aka Paperghost) of Vitalsecurity has posted several articles showing more bad Zango practices, including Zango and the Licat worm, a nasty trojan serving Zango videos, a(nother) Zango profile on MySpace, and trojan named LowZones putting a bunch of Zango domains into Internet Explorer's Trusted Zone on user's computers. Security company Websense posted an alert on November 6 of fraudulent supposed You Tube videos with embedded Zango Toolbar installers on MySpace profiles. Just a week ago, Vitalsecurity posted about ProfileWatcher, another method of spreading Zango on MySpace.

Today Ben Edelman and Eric Howes have published an extensive write up demonstrating how Zango is currently out of compliance with the terms of the FTC settlement, addressing every requirement and displaying dramatic examples of how Zango is in violation of the terms.

Among the many examples, Edelman and Howes have posted documentation showing very recent installations of legacy programs including older Zango, 180searchAssistant and n-case files, which are specifically prohibited by the FTC.  Note there are screenshots and several videos with full details.  Other examples include an installation with no disclosure at all, and numerous installations with poor, substandard, non-compliant disclosure.  Edelman and Howes also report that the CDT will file a comment on Monday regarding Zango's continued use of unlabeled ads, another clear violation of the terms of the settlement.

The write up includes a discussion of the proposed $3 million payment specified in the settlement and why that amount may be a "slap on the wrist", when, in fact, Zango's ill-gotten gains likely far exceed that amount.

Topics: Legal

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