Marketers need to beware of adware

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The New York attorney general recently announced separate settlements 
with three major online advertisers for deceptively promoting 
products and services online through adware, advertising that is 
integrated into software and installed on a consumer's computer by a 
third party, often without the consumer's knowledge or consent.
The settlements with Priceline, Travelocity and Cingular Wireless 
mark the first time an attorney general has held advertisers 
responsible for ads displayed through adware. They impose new 
obligations on advertisers to independently confirm on an ongoing 
basis that advertising is being delivered properly.
The three settlements grew out of the attorney general's 
investigation of online publisher DirectRevenue. In an April 2006 
lawsuit, the attorney general alleged that DirectRevenue installed 
adware programs onto millions of computers that delivered a steady 
stream of advertisements, monitored which Web sites were visited by 
consumers, and collected data that the users submitted, without 
adequate notice or consent.
The attorney general further alleged that the adware programs were 
difficult to remove and consumers who had previously downloaded the 
company's programs, known as "legacy users," continued to receive 
Priceline, Travelocity and Cingular Wireless ads through those 
programs. The attorney general claimed that Priceline, Travelocity 
and Cingular, among others, spent hundreds of thousands of dollars 
delivering its ads via DirectRevenue software.
The settlement agreements require that each advertiser deliver online 
ads only through publishers that provide consumers the name of the 
applicable adware program and any bundled software,  brand each 
advertisement, describe the adware and obtain consumer consent to 
download and run it,  make it practical for consumers to remove the 
adware, obtain consent to continue serving ads to legacy users and 
require the advertiser's affiliates to meet these same requirements.
Priceline, Travelocity and Cingular Wireless will pay $35,000, 
$30,000 and $35,000, respectively, to the State of New York. On a 
prospective basis, the advertisers are required to undertake 
additional due diligence to confirm that their ads are being properly 
displayed.
These settlements highlight the need for all advertisers to take 
their due diligence obligations one step further.
Prior to contracting with a company to deliver their ads, the 
advertisers are required to investigate how ads will be delivered. 
The companies must immediately cease using adware programs that 
violate the settlement agreements or their own adware policies. The 
advertisers are required to update their investigation of each ad 
publisher quarterly.
Even a broad indemnity agreement will not shield an advertiser from 
liability if a regulator challenges the business practice of a third-
party publisher.

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