Advertising.Com, Inc. D/B/A, Teknosurf.Com, and John Ferber

Text (OCR of the scan at left; may contain errors)

IN THE MATTER OF ADVERTISING.COM, INC. DOING BUSINESS AS, TEKNOSURF.COM, AND JOHN FERBER CONSENT ORDER, ETC., IN REGARD TO ALLEGED VIOLATIONS OF SEC. 5 OF THE FEDERAL TRADE COMMISSION ACT Docket C-4147; File No. 0423196 Complaint, September 12, 2005--Decision, September 12, 2005 This consent order, among other things, prohibits Respondents Advertising.com, Inc., and John Ferber – who advertised and distributed computer software products, including the SpyBlast computer software product, advertised as an Internet security program – from making any representation about the performance, benefits, efficacy, or features of SpyBlast or any of respondents’ other executable computer software programs whose principal function is to enhance security or privacy, unless respondents disclose clearly and conspicuously that consumers who install the program will receive advertisements, if that is the case.

Participants For the Commission: Shira D. Modell, Michael F. Ostheimer, Char Pagar, Thomas B. Pahl, Mary K. Engle and Hajime Hadeishi.

For the Respondent: Christine Varney, Hogan & Hartson COMPLAINT The Federal Trade Commission, having reason to believe that Advertising.com, Inc., a corporation, also doing business as Teknosurf.com, and John Ferber, individually and as an officer of the corporation (“respondents”), have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges: 1. Respondent Advertising.com, Inc., also doing business as Teknosurf.com, is a Maryland corporation with its principal office or place of business at 1020 Hull Street, Baltimore, Maryland 21230.

VOLUME 140 Complaint 2. Respondent John Ferber is an officer of the corporate respondent. Individually or in concert with others, he formulates, directs, or controls the policies, acts, or practices of the corporation, including the acts or practices alleged in this complaint. His principal office or place of business is the same as that of Advertising.com, Inc.

3. Respondents have developed, advertised, promoted, and distributed to the public computer software products, including the SpyBlast computer software product.

4. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as “commerce” is defined in Section 4 of the Federal Trade Commission Act.

5. Respondents caused ads for SpyBlast to be served on consumers’ computers (including Exhibit A). These ads represented that because the consumer’s computer was broadcasting an Internet IP address, it was at risk from hackers. Consumers who clicked on this advertisement were shown an ActiveX “security warning” installation box with a hyperlink describing SpyBlast as “Personal Computer Security and Protection Software from unauthorized users” and telling them “once you agree to the License Terms and Privacy Policy – click YES to continue.” (Exhibit B).

6. If a consumer clicked “Yes,” the software was installed, even if the consumer had not clicked on the hyperlink. Only if a consumer clicked on the hyperlink describing SpyBlast as “Personal Computer Security and Protection Software from unauthorized users” before clicking “YES,” did SpyBlast’s End User Licensing Agreement (“EULA”) appear. (Exhibit C). The EULA contained a statement that consumers agreed to receive marketing messages, including pop-up ads, in exchange for getting SpyBlast. It also stated that respondent Advertising.com collected information about SpyBlast users, including “URLs of VOLUME 140 Complaint visited pages and [the user’s] IP address,” and that this information allowed the company “to send [a user] advertisements that might be of interest to [the user].” 7. SpyBlast could also be downloaded directly from the www.SpyBlast.com website. (Exhibit D). At the very bottom of the www.SpyBlast.com home page, below several hyperlinks to download SpyBlast, a small disclosure appeared. This disclosure stated that “In exchange for usage of the SpyBlast software, user agrees to receive . . . offers on behalf of SpyBlast’s marketing partners.”

8. Respondents downloaded bundled adware onto the computers of consumers who installed SpyBlast. The adware collected information about SpyBlast users, including URLs of visited pages and the user’s IP address, and this information allowed respondents to send users advertisements that respondents believed might be of interest to them. Consumers received a substantial number of pop-up advertisements as result of respondents’ installation of this adware onto their computers. 9. Respondents represented to consumers that Spyblast is an Internet security program. Respondents failed to disclose adequately that SpyBlast includes adware that causes consumers to receive pop-up advertisements, as described in Paragraph 8. The installation of such adware would be material to consumers in their decision whether to install the SpyBlast program. The failure to adequately disclose this fact, in light of the representation made, was, and is, a deceptive act or practice. 10. The acts and practices alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act. THEREFORE, the Federal Trade Commission this 12th day of September, 2005, has issued this complaint against respondent. |. |) Advertisement @ Your Computer Is Currenthy Broadcasting An Internet IP Address.

With this Address, someone Can Immediately Begin Attacking ‘Your Computer!

EXHIBIT B

cep + ue INTERNET SECURITY PROTECTION { CLOSE ] IMPORTANT: PLEASE READ THE FOLLOWING END USER LICENSE AGREEMENT AND REVIEW OUR PRIVACY -POLICY CLOSELY BEFORE 1! PROCEEDING WITH THE DOWNLOAD OR USE OF THE SPYBLAST SOFTWARE. The following End User License Agreement (the “Agreement”) between you (referred to: herein sometimes as “You” and “End. User’) and Advertising.com d/b/a Teknosurf.com (“Teknosurf.com” or the “Company”) sets out the terms of your use of the SpyBlast software (the “Program”), please read them carefully. By downloading the Program, you are agreeing to be bound by the terms of this Agreement. The Program is offered to you conditioned on your acceptance without modification of the terms, conditions, and notices contained herein and in our Privacy Policy set forth at hitp://www.spyblast.com/privacy.html. !f you are unwilling to agree to the terms of this ‘ ‘ Agreement or our Privacy Policy, you will not be granted access to the Program. The . terms. of this Agreement comprises the entire agreement between you and Teknosurf.com with respect to the Program and supersede all prior agreements between the parties, regarding the subject matter contained herein. USE OF THE PROGRAM Teknosurf.com is providing you with free proprietary anti-snooping software that alerts you when there is an unauthorized attempt to access your computer. In consideration for the Program, you agree and covenant to receive from Teknosurf.com, from time to time relevant marketing messages based on Your web surfing habits, including pop-up advertisements, which may include opportunities to join and/or participate in services or programs that are offered by other, third-party companies that advertise through Teknosurf.com via the Program. Any dealings with advertisers who market via the Program, or participation in promotions, including the delivery of and the payment for goods and services, and any other terms, conditions, warranties or representations associated with such dealings or promotions, are solely between you and the advertiser or other third party. Teknosurf.com shall not be responsible or liable for any part of any such dealings or promotions. Teknosurf.com collects non-personally identifiable, online behavior statistical information about End Users. Examples of information that we collect include URLs of visited pages and your IP address. Upon termination of an online session, closing of the software application and/or removal of the Program from your computer this information will no longer be collected. We gather this information only to improve the administration of the Program and to provide End Users with a more personally relevant internet experience. Summaries of such information will be made available to advertisers, so that they can better target their advertising campaigns. The summaries do not include End Users’ names, addresses, email addresses, or other personally identifiable information. The gathered information will also allow us to send you advertisements that might be of interest to You. European Union Service users understand and consent to the processing of personal information in the United States. You agree to use the Program ina responsible manner and, should You download the Program to a computer, which is, used:in the workplace, in compliance with any of your employer's policies, in addition to complying with any federal, state and local laws. End Users can use the Program on any number of computers as determined by the End User. To be eligible to use the Program, You must agree to receive from Teknosurf.com, from time to time, marketing messages that are offered by other, third-party companies that advertise through Teknosurf.com via the Program. You may, at any time, opt-out of receiving such marketing messages by closing the Program or removing the Program from Your computer. REPRESENTATIONS OF END USER EXHIBIT C ittp://www.spyblast.com/terms.html AAR 2 Uw easawead a MY ow ve You represent and warrant that you are the owner of this computer and that you have authorized the download and installation of the Program or that the owner of this computer has authorized you to do so. You agree, with respect to all other users of this computer that you have caused the Program to reside, to (i) provide a copy of the SpyBlast Privacy Statement and End User License Agreement; and (ii) to obtain their consent to same before allowing them to use this computer. Alternatively, if you have the legal right to accept this Agreement on behalf of one or more users of this computer that you have caused the Program to reside, then you hereby accept this Agreement on behalf of all such other users. Also, you agree not to use the Program, in a manner prohibited by law, or in violation of any contractual provision by which you are bound. You agree to comply with all applicable laws, rules and regulations in your use of the Program.

You further represent and warrant that you shall not (a) use, or encourage others to use, any robot, spider, other automatic or non-automatic manual device or process ; intended to interfere or attempt to interfere with the proper working of the Program, or \ (b) use any means to avoid the display of any third-party marketing messages via the : Program while retaining the ability to use the Program, or (c) act against the business interests or reputation of Teknosurf.com or its affiliates or marketing partners. TERMINATION Use of the Program on any computer is completely voluntary. You may terminate this Agreement by removing the Program from Your computer at anytime for any reason. SOFTWARE LICENSE By entering into this Agreement you are receiving A NON-EXCLUSIVE, LIMITED, FREE BETA VERSION ONLY LICENSE TO USE THE PROGRAM which is provided on an."AS IS" basis, for your private personal use only. This Agreement, the SpyBlast Privacy Policy and any other applicable terms of use document available at http://www.SpyBlast.com shail apply to any use of the Program. You agree not to extract information from the Program, reverse engineer, decompile, disassemble, alter, duplicate, make copies (other than for backup purposes), create derivative works from, distribute or provide others with the Program. Your license to an existing version of Program may, at Teknosurf.com's discretion, expire when new versions of Program are released. Any and all such modifications or enhancements to the Program by you, Teknosurf.com, or Teknosurf.com’s affiliates or partners, remain the sole property of Teknosurf.com. Notwithstanding the foregoing, Teknosurf.com has no obligation to make available to you any subsequent versions of Program. By accepting the terms of this Agreement you agree that Teknosurf.com is permitted to limit, deny, create different priorities to different users, or cancel some or all of the functionality of the Program at any time, without prior notice. Teknosurf.com makes no warranties or guarantees as to the availability or reliability of the Program to you or to any other user. The Program functionality or any part thereof including without limitation, the availability and functionality of any feature and function of the Program may be changed, limited or terminated at any time, temporarily or permanently, without prior notice, for any reason or no reason by Teknosurf.com in its sole discretion (“Changes in Functionality”). You agree to bear the risks of and hold Teknosurf.com harmless for any and all effects that the Changes of Functionality may have on your ability to use the Program in whole or in part. Additionally, tinea: envhlact cam/terme htmi 8/21/200: wed vocument aMpY vw:

Teknosurf.com may require the update or automatic distribution of the Program on your computer when a new version of the Program is released to the general public, when new features are available, to display promotional offers, and/or to add new applications to the applications that comprise Program. This update or new download may occur automatically or through other means. The Program contains features that may link you or provide you with certain reference and functionality to third parties’ Web sites, directories, servers or services ("Third Party Services"). These features are provided by Teknosurf.com only as a convenience to You. The Third Party Services are not reviewed, controlled or examined by Teknosurf.com in any way and Teknosurf.com is not responsible for the contents of any such Third Party Services, or any link contained therein. The offering of these features does not imply endorsement of the Third Party Services by Teknosurf.com. It is your sole responsibility to comply with the appropriate terms of services of these Third Party Services you chose to access using these features, as well as with any other obligation under copyright, trade secrets, defamation, decency, privacy, security and export laws and any other applicable laws. In no event shall \ Teknosurf.com be liable to anyone for any damage arising from or occasioned by the creation or use of the Third Party Services or the information or material accessed. through these services. Teknosurf.com reserves the exclusive right and sole discretion to add, change, decline disable or remove, without notice, any feature, access or link to any of the Third Party Services from the Program and/or to introduce different features, access oi links to different users. In addition, Teknosurf.com does not endorse any service or product that may be offered by any third party that is advertising through the Program.

Teknosurf.com reserves all rights in the Program not expressly granted to you in this Agreement.

OTHER RESTRICTIONS You may not rent, lend, assign, or lease the Program, but you may transfer your rights under this Agreement on a permanent basis provided (i) you transfer all copies of the Program and this Agreement; and (ji) the recipient agrees to be bound to this Agreement. Any transfer must include the most recent product upgrade. Prior to transferring the Program you must remove the Program to be transferred from your machine. .

PROPRIETARY RIGHTS You agree that the Program is licensed, not sold to you. You agree that the Program belongs to Teknosurf.com, including all intellectual and proprietary rights, unless otherwise specified. Teknosurf.com retains all right, title and interest in and to the Program at all times, and regardless of the form or media in or on which the original or other copies may subsequently exist. Additionally, You acknowledge that content, including but not limited to text, software, music, sound, photographs, video, graphics; or other material contained in either the Program; or electronically distributed, commercially produced information presented to you via the ‘Program, by Teknosurf.com, or Teknosurf.com's third party marketing partners or other content providers; is protected by copyrights, trademarks, service marks, patents or other proprietary rights and laws. You may not modify, copy, reproduce, republish, resell, upload, post, transmit, or distribute in any way the Program or content available through the Program and its associated Web Sites, including code and software. This ae Phe 2 De AAs lt neenn hte] 8/21/200:

Pe avUueruiarwiae Sed — bel Agreement gives you no rights to such content. Finally, any suggestions, ideas or inventions that you voluntarily and optionally disclose to us through any means will be used, or not used, by Teknosurf.com at Teknosurf.com's sole discretion; and, Teknosurf.com will have no obligation to you regarding any ideas or inventions that you disclose through such means.

DISCLAIMERS; LIMITATION OF LIABILITY TEKNOSURF.COM AND/OR ITS RESPECTIVE SUPPLIERS MAKE NO REPRESENTATIONS ABOUT THE SUITABILITY, RELIABILITY, AVAILABILITY, TIMELINESS, AND ACCURACY OF THE PROGRAM FOR ANY PURPOSE. THE PROGRAM IS PHOVIDED AS5 1 5 1 4 5 1091 719 44 31 91.126717 IS WITHOUT WARRANTY OF ANY KIND. TEKNOSURF.COM AND/OR ITS RESPECTIVE SUPPLIERS HEREBY DISCLAIM ALL WARRANTIES AND CONDITIONS WITH REGARD TO THE PROGRAM, INCLUDING ALL IMPLIED WARRANTIES AND CONDITIONS OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, TITLE AND NON- INFRINGEMENT. TEKNOSURF.COM MAKES NO WARRANTY REGARDING ANY GOODS OR SERVICES PURCHASED OR OBTAINED THROUGH THE PROGRAM OR TRANSACTIONS ENTERED INTO THROUGH THE PROGRAM. , \ TEKNOSURF.COM DOES NOT WARRANT OR GUARANTEE THAT THE toe PROGRAM WILL BE UNINTERRUPTED OR ERROR-FREE OR THAT DEFECTS IN THE PROGRAM WILL BE CORRECTED. TEKNOSURF.COM DOES NOT WARRANT OR GUARANTEE THAT THE PROGRAM OR ANY INFORMATION WILL BE FREE FROM INFECTION BY VIRUSES, WORMS, TROJAN-HORSES OR ANYTHING. ELSE MANIFESTING CONTAMINATING OR DESTRUCTIVE. PROPERTIES.

IN NO EVENT SHALL TEKNOSURF.COM AND/OR ITS SUPPLIERS BE LIABLE FOR ANY DIRECT, INDIRECT, PUNITIVE, INCIDENTAL, SPECIAL, CONSEQUENTIAL DAMAGES OR ANY DAMAGES WHATSOEVER INCLUDING, WITHOUT LIMITATION, DAMAGES FOR LOSS OF USE, DATA OR PROFITS, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THE USE OR PERFORMANC!- OF THE PROGRAM OR RELATED WEB SITES, WITH THE DELAY OR INABILITY TO USE THE PROGRAM OR RELATED WEB SITES, THE PROVISION OF OR FAILURE TO PROVIDE SERVICES, OR FOR ANY INFORMATION, SOFTWARE, PRODUCTS, SERVICES AND RELATED GOODS, SERVICES OR GRAPHICS PURCHASED OR OBTAINED OR MESSAGES RECEIVED OR TRANSACTIONS ENTERED INTO THROUGH THE PROGRAM, OR OTHERWISE ARISING QUT OF THE USE OF THE PROGRAM, WHETHER BASED ON CONTRACT, TORT, NEGLIGENCE, STRICT LIABILITY OR OTHERWISE, EVEN IF TEKNOSURF.COM OR ANY OF ITS SUPPLIERS HAS BEEN ADVISED OF THE POSSIBILITY OF DAMAGES. BECAUSE SOME STATES/JURISDICTIONS DO NOT ALLOW THE EXCLUSION OR LIMITATION OF LIABILITY FOR CONSEQUENTIAL OR INCIDENTAL DAMAGES, THE ABOVE LIMITATION MAY NOT APPLY TO YOU. IF YOU ARE DISSATISFIED WITH ANY PORTION OF THE PROGRAM, OR WITH ANY OF THESE TERMS OF USE, YOUR SOLE AND EXCLUSIVE REMEDY IS TO IMMEDIATELY (1) DISCONTINUE USING THE PROGRAM, AND (2) TERMINATE . THIS AGREEMENT. a INDEMNIFICATION You agree to indemnify and hold Teknosurf.com, its subsidiaries, affiliates, officers and employees, harmless from any claim or demand, including reasonable attorneys fees, made by any third party due to or arising out of your use of the Program, the . violation of these terms of this Agreement by you, or the infringement by you, or other user of the Program using your computer, of any intellectual property or other right of any person or entity.

MODIFICATIONS Teknosurf.com reserves the right to change any of these terms and conditions at any trefhann: onuhiact ram/tearme html 8/21/200: UL BYU UL augYwv vi .

time. Upon any change in the terms of this Agreement, Teknosurf.com will notify all members through notice on the SpyBlast.com web site. Your continued use of the Program constitutes an affirmative: (1) acknowledgment by you of the terms of this Agreement and any modifications; and (2) agreement by you to abide and be bound by the terms of this Agreement and modifications. Teknosurf.com reserves the right to modify or discontinue the Program with or without notice. Teknosurf.com shail not be liable to your or any third party should Teknosurf.com exercise its right to modify or discontinue the Program.

GENERAL .

This agreement is governed by the laws of the State of Maryland, and the United States of America and, by accepting the terms of this agreement, You irrevocably consent to the exclusive jurisdiction of the courts of the State of Maryland and the federal courts situated in the State of Maryland in connection with any action arising between you and Teknosurf.com. Use of the Program is unauthorized in any “jurisdiction that does not give effect to all provisions of these terms and conditions, including without limitation this paragraph. You agree that no joint venture, partnership, employment, or agency relationship exists between you and Teknosurf.com as a result of this Agreement or use of the Program. Teknosurf.com's performance of this agreement is subject to existing laws and legal process, and ' nothing contained in this agreement is in derogation of Teknosurf.com’s right to comply with governmental, court and law enforcement requests or requirements relating to your use of the Program or information provided to or gathered by Teknosurf.com with respect to such use. If any part of this Agreement is determined - to be invalid or unenforceable pursuant to applicable law including, but not limited to, the warranty disclaimers and liability limitations set forth above, then the invalid or unenforceable provision will be deemed superseded by a valid, enforceable provision that most closely matches the intent of the original provision and the remainder of the . agreement shall continue in effect. Any waiver (express or. implied) or delay by Teknosurf.com of any default or breach of this Agreement shall not constitute a waiver . of any other or subsequent default or breach. A printed version of this Agreement and of any notice given in electronic form shall be admissible in judicial or administrative proceedings based upon or relating to this agreement to the same extent and subject to the same conditions as other business documents and records originally generated and maintained in printed form. You and Teknosurf.com agree that any cause ot action arising out of or related to this Agreement or the Program must commence within one (1) year after the cause of action arose; otherwise, such cause of action is . permanently barred.

Date: 8/14/03 Revision: 3 Copyright © 2003 Teknosurf.com Privacy Policy | Support tala omuvhlaat namiltarme html . 8/2 1/200:

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Below is just some of what an intruder sees on YOUR COMPUTER! If you can view the results in the box above: Hackers may have the ability to view your private files and steal your passwords.

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If someone tries to gain access to your computer, the SpyBlast icon will FLASH instantly. , EXHIBIT D ittp://www.spyblast.com/ (hr Spybilast intemet security Sortware! a é SpyBlast shows you the following information about someone's attempt to invade your privacy: e Date and time of the attempted violation e IP address of the violator e Number of attempts the violator has made See SpyBlast Results click here! : a ! ., Instead5 1 8 1 1 3 437 728 32 32 96.980400 of5 1 8 1 1 4 481 728 181 40 95.997055 continuing5 1 8 1 1 5 675 730 33 29 95.997055 to5 1 8 1 1 6 721 727 42 32 96.986969 be5 1 8 1 1 7 778 735 21 23 95.739532 a5 1 8 1 1 8 810 726 111 37 95.739532 victim,5 1 8 1 1 9 936 726 140 31 96.475967 becomes 1 8 1 1 10 1090 722 109 34 96.860878 aware5 1 8 1 1 11 1212 724 33 32 96.356575 of5 1 8 1 1 12 1255 724 75 31 95.683548 who5 1 8 1 1 13 1343 723 27 31 95.683548 is5 1 8 1 1 14 1383 722 187 41 96.401924 attempting5 1 8 1 1 15 1581 724 34 30 96.195061 to5 1 8 1 1 16 1628 723 123 31 96.739342 access5 1 8 1 1 17 1763 728 79 33 96.821808 yours 1 8 1 1 18 1853 703 174 62 96.413055 computers 1 8 1 1 19 2034 720 70 31 96.998573 with4 1 8 1 2 0 294 769 1380 54 -1 5 1 8 1 2 1 294 776 180 40 87.493568 SpyBlast.5 1 8 1 2 2 490 775 38 48 92.209724 Its5 1 8 1 2 3 542 773 125 40 96.553879 simple,5 1 8 1 2 4 680 772 203 37 96.616859 convenient,5 1 8 1 2 5 898 771 157 37 96.741356 effective,5 1 8 1 2 6 1070 770 65 32 96.163231 ands 1 8 1 2 7 1149 769 19 33 90.871986 it5 1 8 1 2 8 1177 769 66 41 90.871986 just5 1 8 1 2 9 1254 769 59 32 95.585266 sits5 1 8 1 2 10 1327 769 29 31 95.585266 in5 1 8 1 2 11 1369 776 80 32 96.381989 yours 1 8 1 2 12 1460 770 126 38 96.403641 systems 1 8 1 2 13 1598 769 76 39 96.139420 tray.2 1 9 0 0 0 427 874 1593 53 -1 3 1 9 1 0 0 427 874 1593 53 -1 4 1 9 1 1 0 427 874 1593 53 -1 5 1 9 1 1 1 427 882 117 38 96.611450 Clicks 1 9 1 1 2 561 882 101 38 96.792496 here5 1 9 1 1 3 677 884 46 35 95.838364 to5 1 9 1 1 4 740 880 228 38 96.291115 download5 1 9 1 1 5 984 888 109 39 96.062973 yours 1 9 1 1 6 1111 878 128 38 93.287788 FREE5 1 9 1 1 7 1255 877 214 49 90.637032 SpyBlast5 1 9 1 1 8 1484 886 84 39 96.864174 spy5 1 9 1 1 9 1583 875 204 43 96.097084 software5 1 9 1 1 10 1804 874 216 49 95.772789 instantly.2 1 10 0 0 0 294 983 1777 75 -1 3 1 10 1 0 0 294 983 1777 75 -1 4 1 10 1 1 0 294 983 1777 40 -1 5 1 10 1 1 1 294 994 11 10 92.782204 *5 1 10 1 1 2 317 994 23 24 95.703377 In5 1 10 1 1 3 351 993 133 30 95.703377 exchanges 1 10 1 1 4 493 993 38 24 96.695274 for5 1 10 1 1 5 540 997 82 25 96.824524 usage5 1 10 1 1 6 632 991 26 25 96.834564 of5 1 10 1 1 7 666 991 43 25 93.292175 thes 1 10 1 1 8 720 991 121 31 90.632149 SpyBlast5 1 10 1 1 9 850 991 124 27 96.467377 software,5 1 10 1 1 10 985 995 60 19 96.042473 users 1 10 1 1 11 1054 994 95 25 96.968246 agrees5 1 10 1 1 12 1158 990 26 23 94.572876 to5 1 10 1 1 13 1195 988 107 28 94.572876 receive,5 1 10 1 1 14 1312 988 63 25 95.864365 from5 1 10 1 1 15 1384 987 58 25 96.794701 times 1 10 1 1 16 1451 988 26 24 96.803429 to5 1 10 1 1 17 1487 986 65 29 96.870377 time,5 1 10 1 1 18 1563 985 95 32 96.950638 specials 1 10 1 1 19 1668 985 77 25 96.951935 offers5 1 10 1 1 20 1754 991 35 19 96.951935 on5 1 10 1 1 21 1799 984 84 26 96.327583 behalf5 1 10 1 1 22 1892 985 26 25 93.291542 of5 1 10 1 1 23 1928 983 143 32 74.298737 SpyBlast's4 1 10 1 2 0 296 1023 908 35 -1 5 1 10 1 2 1 296 1028 134 30 96.860481 marketing5 1 10 1 2 2 441 1029 121 29 96.775879 partners.5 1 10 1 2 3 582 1027 93 25 96.727066 Please5 1 10 1 2 4 684 1032 49 20 96.768158 sees 1 10 1 2 5 743 1026 43 25 92.710548 thes 1 10 1 2 6 796 1025 118 32 49.696365 Spyblast5 1 10 1 2 7 922 1025 88 24 93.292511 Terms5 1 10 1 2 8 1020 1024 19 25 93.292511 &5 1 10 1 2 9 1050 1023 154 26 96.752014 Conditions.2 1 11 0 0 0 302 1036 1752 88 -1 3 1 11 1 0 0 2027 1036 27 24 -1 4 1 11 1 1 0 2051 1036 3 10 -1 5 1 11 1 1 1 2051 1036 3 10 45.562229 14 1 11 1 2 0 2027 1049 4 11 -1 5 1 11 1 2 1 2027 1049 4 11 74.673798 ‘3 1 11 2 0 0 302 1085 31 39 -1 4 1 11 2 1 0 329 1085 4 18 -1 5 1 11 2 1 1 329 1085 4 18 93.182579 \4 1 11 2 2 0 302 1107 5 17 -1 5 1 11 2 2 1 302 1107 5 17 88.885231 \2 1 12 0 0 0 422 1112 1607 42 -1 3 1 12 1 0 0 422 1112 1607 42 -1 4 1 12 1 1 0 422 1112 1607 42 -1 5 1 12 1 1 1 422 1121 122 24 93.275269 Attention5 1 12 1 1 2 555 1120 121 31 91.984077 SpyBlast5 1 12 1 1 3 685 1119 123 26 96.650658 Software5 1 12 1 1 4 818 1119 86 35 96.650658 Users:5 1 12 1 1 5 914 1118 53 24 93.302017 Thes 1 12 1 1 6 977 1118 122 30 92.790245 SpyBlast5 1 12 1 1 7 1108 1117 89 25 93.294952 Terms5 1 12 1 1 8 1207 1117 19 25 93.288506 &5 1 12 1 1 9 1236 1116 148 26 96.158730 Conditions5 1 12 1 1 10 1394 1116 66 24 97.004822 have5 1 12 1 1 11 1470 1112 68 27 89.963097 been5 1 12 1 1 12 1548 1114 111 31 96.574593 updated5 1 12 1 1 13 1668 1114 116 25 96.793266 effective5 1 12 1 1 14 1793 1114 98 30 96.806435 August5 1 12 1 1 15 1901 1113 41 28 96.229446 14,5 1 12 1 1 16 1952 1113 77 25 95.703186 2003.2 1 13 0 0 0 910 1245 631 35 -1 3 1 13 1 0 0 910 1245 631 35 -1 4 1 13 1 1 0 910 1245 631 35 -1 5 1 13 1 1 1 910 1249 88 28 89.146881 Terms5 1 13 1 1 2 1008 1248 19 25 89.146881 &5 1 13 1 1 3 1038 1247 147 30 96.009880 Conditions5 1 13 1 1 4 1195 1247 6 33 96.401093 |5 1 13 1 1 5 1212 1247 101 30 97.005379 Privacy5 1 13 1 1 6 1323 1247 83 30 96.744034 Policy5 1 13 1 1 7 1416 1245 5 34 95.089981 |5 1 13 1 1 8 1431 1246 110 31 96.179825 Support2 1 14 0 0 0 2219 62 251 45 -1 3 1 14 1 0 0 2219 62 251 45 -1 4 1 14 1 1 0 2219 62 251 45 -1 5 1 14 1 1 1 2219 71 97 36 84.890350 rage5 1 14 1 1 2 2331 71 23 25 79.663246 Z5 1 14 1 1 3 2368 70 39 26 55.619629 OI5 1 14 1 1 4 2422 62 48 34 0.000000 Z—2 1 15 0 0 0 2257 3256 196 20 -1 3 1 15 1 0 0 2257 3256 196 20 -1 4 1 15 1 1 0 2257 3256 196 20 -1 5 1 15 1 1 1 2257 3257 77 19 0.000000 e1915 1 15 1 1 2 2347 3256 106 20 0.000000 1INNN VOLUME 140 Decision and Order DECISION AND ORDER The Federal Trade Commission having initiated an investigation of certain acts and practices of the respondents named in the caption hereof, and the respondents having been furnished thereafter with a copy of a draft of complaint which the Bureau of Consumer Protection proposed to present to the Commission for its consideration and which, if issued by the Commission, would charge the respondents with violation of the Federal Trade Commission Act; and The respondents, their attorneys, and counsel for the Commission having thereafter executed an agreement containing a consent order, an admission by the respondents of all the jurisdictional facts set forth in the aforesaid draft complaint, a statement that the signing of the agreement is for settlement purposes only and does not constitute an admission by the respondents that the law has been violated as alleged in such complaint, or that the facts as alleged in such complaint, other than jurisdictional facts, are true, and waivers and other provisions as required by the Commission’s Rules; and The Commission having thereafter considered the matter and having determined that it had reason to believe that the respondents have violated the Act, and that complaint should issue stating its charges in that respect, and having thereupon accepted the executed consent agreement and placed such agreement on the public record for a period of thirty (30) days, now in further conformity with the procedure prescribed in § 2.34 of its Rules, the Commission hereby issues its complaint, makes the following jurisdictional findings, and enters the following order: 1. Respondent Advertising.com, Inc., also doing business as Teknosurf.com, is a Maryland corporation with its principal office or place of business at 1020 Hull Street, Baltimore, Maryland 21230.

2. Respondent John Ferber is an officer of the corporate respondent. Individually or in concert with others, he formulates, VOLUME 140 Decision and Order directs, or controls the policies, acts, or practices of the corporation. His principal office or place of business is the same as that of Advertising.com, Inc.

3. The Federal Trade Commission has jurisdiction of the subject matter of this proceeding and of the respondent, and the proceeding is in the public interest.

ORDER DEFINITIONS For purposes of this Order, the following definitions shall apply:

1. Unless otherwise specified, “respondents” shall mean Advertising.com, Inc., also doing business as Teknosurf.com, its successors and assigns, and their officers; John Ferber, individually and as an officer of the corporation; and each of the above’s agents, representatives, and employees. 2. “Commerce” shall mean as defined in Section 4 of the Federal Trade Commission Act, 15 U.S.C. § 44.

3. “Endorsement” shall mean as defined in 16 C.F.R. § 255.0(b). 4. “Clearly and prominently” shall mean as follows: A. In an advertisement communicated through an electronic medium (such as television, video, radio, and interactive media such as the Internet and online services), the disclosure shall be presented simultaneously in both the audio and visual portions of the advertisement. Provided, however, that in any advertisement presented solely through visual or audio means, the disclosure may be made through the same means in which the advertisement is presented. The audio disclosure shall be delivered in a volume and cadence sufficient for an ordinary consumer to hear and comprehend it. The visual disclosure VOLUME 140 Decision and Order shall be of a size and shade, and shall appear on the screen for a duration, sufficient for an ordinary consumer to read and comprehend it. In addition to the foregoing, in interactive media, the disclosure shall also be unavoidable and shall be presented prior to the consumer installing or downloading any software code, program, or content and prior to the consumer incurring any financial obligation.

B. In a print advertisement, promotional material, or instructional manual, the disclosure shall be in a type size and location sufficiently noticeable for an ordinary consumer to read and comprehend it, in print that contrasts with the background against which it appears. In multipage documents, the disclosure shall appear on the cover or first page. The disclosure shall be in understandable language and syntax. Nothing contrary to, inconsistent with, or in mitigation of the disclosure shall be used in any advertisement. I.

IT IS ORDERED that respondents, directly or through any corporation, subsidiary, division, or other device, in connection with the labeling, advertising, promotion, offering for sale, sale, or distribution, in or affecting commerce, of SpyBlast or any of respondents’ other executable computer software programs whose principal function is to enhance security or privacy shall not make any representation, in any manner, expressly or by implication, including through the use of endorsements or the product name, about the performance, benefits, efficacy, or features of such program, unless they disclose, clearly and prominently, that consumers who install the program will receive advertisements, if that is the case.

II.

IT IS FURTHER ORDERED that respondent Advertising.com, Inc., its successors and assigns, and respondent John Ferber shall, VOLUME 140 Decision and Order for five (5) years after the last date of dissemination of any representation covered by this order, maintain and upon request make available to the Federal Trade Commission for inspection and copying:

A. All advertisements and promotional materials containing the representation;

B. All materials that were relied upon in disseminating the representation; and C. All tests, reports, studies, surveys, demonstrations, or other evidence in their possession or control that contradict, qualify, or call into question the representation, or the basis relied upon for the representation, including complaints and other communications with consumers or with governmental or consumer protection organizations. III.

IT IS FURTHER ORDERED that respondent Advertising.com, Inc., its successors and assigns, and respondent John Ferber shall deliver a copy of this order to all current and future principals, officers, directors, and managers, and to all current and future employees, agents, and representatives having responsibilities with respect to the subject matter of this order. Respondents shall deliver this order to current personnel within thirty (30) days after the date of service of this order, and to future personnel within thirty (30) days after the person assumes such position or responsibilities.

IV.

IT IS FURTHER ORDERED that respondent Advertising.com, Inc., and its successors and assigns, shall notify the Commission at least thirty (30) days prior to any change in the corporation that may affect compliance obligations arising under this order, including, but not limited to, a dissolution, assignment, sale, VOLUME 140 Decision and Order merger, or other action that would result in the emergence of a successor corporation; the creation or dissolution of a subsidiary, parent, or affiliate that engages in any acts or practices subject to this order; the proposed filing of a bankruptcy petition; or a change in the corporate name or address. Provided, however, that, with respect to any proposed change in the corporation about which respondent learns less than thirty (30) days prior to the date such action is to take place, respondent shall notify the Commission as soon as is practicable after obtaining such knowledge. All notices required by this Part shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, 600 Pennsylvania Avenue, N.W., Washington, D.C. 20580. V.

IT IS FURTHER ORDERED that respondent John Ferber, for a period of ten (10) years after the date of issuance of this order, shall notify the Commission of the discontinuance of his current business or employment, or of his affiliation with any new business or employment. The notice shall include respondent’s new business address and telephone number and a description of the nature of the business or employment and his duties and responsibilities. All notices required by this Part shall be sent by certified mail to the Associate Director, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, D.C. 20580.

VI.

IT IS FURTHER ORDERED that respondent Advertising.com, Inc., its successors and assigns, and respondent John Ferber shall, within sixty (60) days after service of this order, and at such other times as the Federal Trade Commission may require, file with the Commission a report, in writing, setting forth in detail the manner and form in which they have complied with this order. VOLUME 140 Decision and Order VII.

This order will terminate twenty (20) years from the date of its issuance, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later; provided, however, that the filing of such a complaint will not affect the duration of:

A. Any Part in this order that terminates in less than twenty (20) years;

B. This order’s application to any respondent that is not named as a defendant in such complaint; and C. This order if such complaint is filed after the order has terminated pursuant to this Part.

Provided, further, that if such complaint is dismissed or a federal court rules that the respondent did not violate any provision of the order, and the dismissal or ruling is either not appealed or upheld on appeal, then the order will terminate according to this Part as though the complaint had never been filed, except that the order will not terminate between the date such complaint is filed and the later of the deadline for appealing such dismissal or ruling and the date such dismissal or ruling is upheld on appeal. VOLUME 140 Analysis Analysis of Proposed Consent Order to Aid Public Comment The Federal Trade Commission has accepted, subject to final approval, an agreement containing a consent order from Advertising.com, Inc. and John Ferber, individually and as an officer of Advertising.com (together “respondents”). The proposed consent order has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement or make final the agreement’s proposed order.

Respondents advertised and distributed computer software products, including the SpyBlast computer software product, which was advertised as an Internet security program. This matter concerns the allegation that respondents failed to disclose adequately that SpyBlast included adware that caused consumers to receive pop-up advertisements.

The Commission’s complaint alleges that respondents disseminated ads for SpyBlast that represented that because a consumer’s computer was broadcasting an Internet IP address, the computer was at risk from hackers. According to the complaint, consumers who clicked on this advertisement were shown an ActiveX “security warning” installation box with a hyperlink describing SpyBlast as “Personal Computer Security and Protection Software from unauthorized users” and telling them “once you agree to the License Terms and Privacy Policy – click YES to continue.” If a consumer clicked “Yes,” the software was installed, even if the consumer had not clicked on the hyperlink. Only if a consumer clicked on the hyperlink describing SpyBlast as “Personal Computer Security and Protection Software from unauthorized users” before clicking “YES,” did SpyBlast’s End VOLUME 140 Analysis User Licensing Agreement (“EULA”) appear. The EULA contained a statement that consumers agreed to receive marketing messages, including pop-up ads, in exchange for getting SpyBlast. The complaint further alleges that SpyBlast could also be downloaded directly from the www.SpyBlast.com website. At the very bottom of the www.SpyBlast.com home page, below several hyperlinks to download SpyBlast, a small disclosure stating that “In exchange for usage of the SpyBlast software, user agrees to receive . . . offers on behalf of SpyBlast’s marketing partners” appeared.

According to the Commission’s complaint, respondents downloaded bundled adware onto the computers of consumers who installed SpyBlast. The adware collected information about SpyBlast users, including URLs of visited pages and the user’s IP address, and this information allowed respondents to send users advertisements that they believed might be of interest to them. Consumers received a substantial number of pop-up advertisements as result of respondents’ installation of this adware onto their computers.

The complaint alleges that in representing that SpyBlast is an Internet security program, respondents failed to disclose adequately that SpyBlast included adware that caused consumers to receive pop-up advertisements. The complaint further alleges that the presence of the bundled adware would have been material to consumers in their decision whether to install SpyBlast, and, therefore, that the failure to disclose adequately this material fact was a deceptive practice. This allegation regarding the disclosure of bundled adware applies general Commission law on deception, as enunciated in the Federal Trade Commission Policy Statement on Deception, appended to Cliffdale Assocs., 103 F.T.C. 110, 174-83 (1984). The application of this law in an online context was illustrated in a 2000 FTC Staff Guidance Document, Dot Com Disclosures: Information about Online Advertising, which is available at http://www.ftc.gov/bcp/conline/pubs/buspubs/dotcom/index.pdf. VOLUME 140 Analysis The proposed consent order contains provisions designed to prevent respondents from engaging in similar acts and practices in the future. The proposed order is designed specifically to address the facts of the case at hand. However, the limitation in the proposed order to respondents’ software programs whose principal function is to enhance security or privacy should not be read more broadly to suggest that the requirement for clear and prominent disclosure is necessarily limited to those situations. Moreover, the problem here was not the security software that Advertising.com disseminated with its adware. Instead, it was the respondents’ practice of downloading software onto users’ computers, without adequate notice and consent, that generated repeated pop-up ads as the computer users surfed the Web. Part I of the proposed order prohibits respondents from making any representation about the performance, benefits, efficacy, or features of SpyBlast or any of respondents’ other executable computer software programs whose principal function is to enhance security or privacy, unless respondents disclose clearly and conspicuously that consumers who install the program will receive advertisements, if that is the case. Parts II through VI require respondents to keep copies of relevant advertisements and materials substantiating claims made in the advertisements; to provide copies of the order to certain of their personnel; to notify the Commission of changes in corporate structure (for the corporate respondents) and changes in employment (for the individual respondent) that might affect compliance obligations under the order; and to file compliance reports with the Commission. Part VII provides that the order will terminate after twenty (20) years under certain circumstances. The purpose of this analysis is to facilitate public comment on the proposed order, and it is not intended to constitute an official interpretation of the agreement and proposed order or to modify in any way their terms.

VOLUME 140 Complaint