Today CDT submitted comments to the Federal Trade Commission (FTC) regarding the agency’s proposed settlement with adware distributor DirectRevenue LLC. Although we are pleased with the injunctive relief obtained by the Commission, the monetary relief leaves something to be desired.

In terms of injunctive relief, CDT once again commended the FTC for obtaining a strong, precedent-setting settlement from a spyware company that has burdened millions of consumers with unwanted software. As in the Commission’s settlement with Zango Inc., several of the requirements in the DirectRevenue settlement set impressive standards. These include requiring DirectRevenue to take responsibility for its affiliates’ actions, to cease advertising to legacy users, and to obtain “express consent” prior to installing software on consumers’ computers.

Although CDT appreciates the value of the settlement’s injunctive relief, we find that the settlement’s monetary relief is substantially inadequate. Last year, BusinessWeek reported that DirectRevenue’s owners personally earned over $20 million by surreptitiously infecting consumers’ computers and bombarding them with advertisements. Internal DirectRevenue documents also reveal the company’s endeavors to aggravate consumers in its quest for profits such as sending “torpedoes” to remove anti-spyware software, popping one ad every minute, and forming a department of “Dark Arts” are just a few examples. CDT understands that litigation is risky, but with behaviors so extreme and profits so extensive, we believe that seeking greater monetary relief is worth the risk.

As FTC Commissioner Jon Leibowitz said in his statement dissenting from the proposed settlement, we cannot let FTC actions become “just a cost of doing business.” It appears as if Direct Revenue may be exiting the adware business altogether, and if that is the case, the owners may essentially be off the hook after paying just a small fraction of what they earned by deceiving and frustrating millions of consumers.

CDT and the FTC both understand that pursuing spyware cases would be easier if the Commission had greater civil penalty authority in this realm. We know this is something that the FTC has been pushing for and CDT continues to be supportive of that effort. But the lack of civil penalty authority should not deter the Commission from seeking maximum damages in a case where such egregious behavior is so well documented.

This entry was posted on Tuesday, March 20th, 2007 at 5:02 pm and is filed under Consumer Privacy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.