In another step in a trend of law enforcement toward holding advertisers liable for how their ads are displayed and for the conduct of their business partners or affiliates, the New York State Attorney General’s office recently announced settlements with three companies as a result of its investigation into the deceptive use of adware. Priceline, Travelocity, and Cingular Wireless entered into settlements with the state following allegations that a provider of online-based advertising used by the companies, DirectRevenue LLC, installed invasive software on consumers’ computers without adequate notice or consent.

These settlements highlight that advertisers may be held liable in certain instances for whom they advertise with. Before signing on with a provider, advertisers should examine a provider’s methods to make sure that they do not use deceptive installation techniques or surreptitiously install software that takes over consumers’ computers. When an advertiser has an online advertising distributor in place, it should consider periodic reexamination of the distributor’s methods of ad placement.

Advertisers also should consider adding specific terms to their contracts with providers that state that the provider will not install adware without appropriate notice and consent, and will make it possible to remove the adware without difficulty. In addition, consistent with industry best practices, to ensure greater control over ad placement, advertisers may set forth in agreements specific parameters to be used to determine placement of ads.

According to the state’s allegations in this case, the software at issue delivered advertisements, monitored consumers’ web usage, collected the data they typed into web forms, and installed other software onto their computers without informing them. The state also alleged that DirectRevenue’s software was difficult for consumers to remove.

providers they use to distribute online ads. Specifically, distributors of online advertising for these companies will need to:

  • provide consumers installing an adware program with a full description of the program (including all information monitored, stored, or distributed by the program; and displayed so that consumers do not have to scroll down to see it) and obtain their consent to download and run the program;
  • make it practicable to remove the adware from computers without having to download other software to complete the uninstallation;
  • disclose to consumers the name of the program and any software bundled with it;
  • include a prominent and easily identifiable brand name or icon in each advertisement; and
  • provide the required notices to “legacy” users (that is, consumers who already have the distributor’s adware installed on their computers) and obtain their consent to continue providing advertisements.

The companies also must require their own adware marketing partners to agree to these provisions.

Adware, as defined by the settlements, includes any downloadable software program that displays advertisements to a computer user, for example, programs that display pop-up or pop-under advertisements, redirect website or search requests, install toolbars onto Internet browsers or e-mail clients, or highlight particular keywords or phrases during web browsing.

To enforce these obligations, the companies will be required to: investigate the advertising delivery methods of adware providers before contracting with them, and continue to investigate on a quarterly basis. In particular, the companies are required to:

  • obtain from adware marketing partners the names of all programs used to distribute the companies’ ads;
  • download each identified adware program from three sites identified through the company’s own Internet research (not provided by the adware marketing partner);
  • test each adware program downloaded to ensure that it meets the terms of the settlement; and
  • cease using any adware program that does not meet the terms of the settlement.

Priceline and Cingular Wireless agreed to pay $35,000 each, and Travelocity agreed to pay $30,000 as part of the settlements.

The state Attorney General’s office described these settlements as a new step in its efforts against deceptive marketing, as it is the first time that advertisers themselves have been held responsible for the actions of a company they hired to distribute advertising online. The Attorney General emphasized that using intermediaries such as media buyers would not shield advertisers from liability for deceptive use of adware. In this case, the state alleged that the companies dealt with DirectRevenue directly or through its sales subsidiary. According to the allegations, all three companies were aware or should have been aware that DirectRevenue had installed adware without consumers’ full notice and consent.