Zango

1999–2001: Pay-to-surf model

Keith and Ken Smith, the CEO and CTO respectively, founded ePIPO in 1999. It was one of the first "pay-to-surf" companies, following in the footsteps of AllAdvantage. This business model paid users a minimal amount to surf the Internet while running an application that showed banner ads. Users could also make money by referring new users.

After enjoying brief success, the pay-to-surf business model declined with the bursting of the dot-com bubble in 2001. The company, which changed its name to 180solutions, adjusted their technologies in several ways:

To show pop-up ads rather than banner ads.

To not have any visible GUI.

To be bundled with other potentially valuable applications.

2002–2005: Distribution via other programs

From 2002 to 2005, 180solutions' applications—such as ncase and 180SA (search assistant)—were distributed via various affiliates. While these affiliates were required by the 180solutions contract and by law to obtain the permission of the user prior to software installation, many did not, resulting in millions of illegal non-consensual installs. Many other affiliates notified users only via the end user license agreement, resulting in millions more arguably legal but essentially non-consensual installs.

180solutions' software showed pop-up ads while a user was surfing the Internet. This software was often bundled with freeware which the user intentionally installed; since permission to install the 180solutions adware was typically hidden in an EULA, most users were unaware they were installing adware. In some cases 180solutions' software was installed as a standalone install. Using this method, an ActiveX prompt simply asked the user to install the software so that they could receive "comparison shopping advertisements." 180solutions contended that the value of the bundled software or the advertisements made up for the inconvenience of the pop-up ads. The value of this trade-off was contested by critics of the adware business model.

In 2004, Benjamin Edelman, assistant professor at Harvard Business School and spyware researcher, analyzed the network behavior of 180solutions applications and claimed they redirected commissions to themselves that were properly due to affiliates, and additionally caused merchants to pay commissions when affected users clicked on merchant sites directly. During this time, 180solutions' applications were designed to be difficult to uninstall, requiring the user to download an additional uninstall application made by 180solutions or to use an adware removal tool. In 2005 the software uninstall was standardized to use Windows' "Add or Remove Programs" function, making it easy to uninstall.

StopBadware.org lists a number of undesirable behaviors associated with Zango Easy Messenger, including "behaves as spyware", "automatically runs on startup",

"displays pop-up advertisements", "installs adware", and "bundled software cannot be closed". The same site states, "We find that Zango Easy Messenger is not badware, although it does engage in behaviors that users should be aware of."

Websense has a Zango-related security advisory dated November 2006, stating that "Websense Security Labs has discovered a number of user pages on the MySpace domain which have videos that look like they are from YouTube. The videos have an installer embedded within them for the Zango Cash Toolbar. When users click on the video, they are directed to a copy of the video, which is hosted on a site called 'Yootube.info.'... the video downloads and attempts to install setup.exe from Zango Cash."

A more detailed analysis of this attack, according to one website, is that "Zango continues numerous practices likely to confuse, deceive, or otherwise harm typical users as well as practices specifically contrary to Zango's obligations under its November 2006 settlement with the FTC." These include failure to include on-screen disclosure of material terms, widespread in-toolbar ads without labeling and hyperlinks, ads for "bogus sites that attempt to defraud users", and third party installations without disclosure.

Litigation

Federal Trade Commission charges and settlement

On January 23, 2006, a public advocacy group filed two official complaints with the Federal Trade Commission. The Center for Democracy and Technology complaints charged 180solutions with engaging in unfair and deceptive business practices, deliberately duping Internet users into downloading intrusive advertising software.

The same year, the Federal Trade Commission charged Zango with "Deceptive Failure to Disclose Adware", "Unfair Installation of Adware", and "Unfair Uninstall Practices" in violation of the Federal Trade Commission Act. Since the FTC ruling, security researchers continued to find Zango involved in problematic installs. In November 2006, Zango settled this complaint, via a consent decree with the FTC, without formally admitting guilt. In the words of the Federal Trade Commission press release, "Zango, Inc., formerly known as 180solutions, Inc., one of the world's largest distributors of adware, and two principals have agreed to settle Federal Trade Commission charges that they used unfair and deceptive methods to download adware and obstruct consumers from removing it, in violation of federal law. The settlement bars future downloads of Zango's adware without consumers' consent, requires Zango to provide a way for consumers to remove the adware, and requires them to give up $3 million in ill-gotten gains." These restrictions were to remain in force for twenty years, and the agreement also requires respondents Keith Smith to notify the FTC of the discontinuance of their current business or employment, or of their affiliation with any new business or employment, for ten years. In July 2007, Edelman said, "Zango continues numerous practices likely to confuse, deceive, or otherwise harm typical users as well as practices specifically contrary to Zango's obligations under its November 2006 settlement with the FTC."

Other litigation

In September 2005, attorney Shawn Collins filed a class action lawsuit against Zango on behalf of three plaintiffs, alleging that Zango deceptively installed spyware on more than 20 million personal computers. The company said its software was voluntarily installed by users who downloaded premium content in exchange for their consent to view advertisements relevant to what they searched for online. During pre-trial discovery, the parties agreed to a dismissal with prejudice, meaning that the suit cannot be brought again by the same complainants. Each side agreed to pay its own fees and expenses.

In 2005, Zango sued Zone Labs for labeling it as spyware.

In May 2007, Zango filed a lawsuit against PC Tools alleging tortious interference with its business and trade libel, because the PC Tools product Spyware Doctor at that time classified Zango software as malicious and removed it without informing users. Zango dropped the suit after the judge ruled that the suit was "unlikely to succeed on the merits of any of its three causes of action" and refused to grant Zango a temporary restraining order.

Also in May 2007, Zango filed in the same court a similar lawsuit against Kaspersky Lab, accusing it of tortious interference, trade libel and unjust enrichment for blocking the installation of Zango software. Kaspersky defended itself by invoking the Communications Decency Act (CDA), saying it was immune from civil liability based on the paragraph of the CDA headed "Protection for 'Good Samaritan' blocking and screening of offensive material". The judge agreed, granting Kaspersky's motion for summary judgment. In 2008, Zango appealed against the ruling. As of April 2008, the National Business Coalition for E-Commerce and Privacy was supporting Zango in the appeal. In June 2009 the court ruled that Kaspersky could not be held liable for any actions it took to manufacture and distribute the technical means to restrict Zango software's access to others.