Advertising com Settles FTC Adware/Spyware Charges

An America Online Inc. subsidiary will no longer bundle its anti-spyware program with software that tracks consumers' online habits and force-feeds them pop-up ads, the Federal Trade Commission said on Wednesday. Inc. also agreed to regular check by the FTC in order to settle a deceptive-advertising suit filed by the consumer-protection agency., also known as, promoted its SpyBlast program as a way to protect users' computers from "hackers," the FTC charged. But those who downloaded the product also installed a separate program that monitored their online behavior and served them pop-up ads.

Such advertising programs, known as "adware," are considered a form of spyware by many consumer advocates because consumers typically don't know they're installing them. didn't provide consumers with adequate notice that SpyBlast came bundled with the adware program, the FTC charged. did not admit or deny guilt as part of the settlement.

AOL, a division of Time Warner Inc. bought for $435 million in June 2004 and understood how's program worked according to FTC's allegations.

An AOL spokesman said that had only been in the adware business for a brief period during 2003. The company makes most of its money by selling banner ads, spokesman Andrew Weinstein said.

"They were not in this business when we purchased them," Weinstein said. " does not now and will not in the future distribute adware products." FTC did not agree that " was not in 'that business' when it was purchased by AOL" and contended they were still in 'that business' anyway. FTC said that "either way, we think that, and its parent AOL, under the terms of its supervision by FTC, will definitly be out of 'that business' in the future. Banner ads are okay, Adware, no more."

The House of Representatives in May voted to stiffen jail sentences and establish multimillion-dollar fines for spyware purveyors. The Senate has not yet acted on the bill.

Copyright 2005 Reuters Limited.

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