Adware, Spyware, Affiliates

Quentin Boyer
Every web-based means of delivering advertising to consumers presents the opportunity, for those inclined to take it, to abuse the power of the technology at hand.

Accordingly, every innovation in the brief history of online advertising has been employed with both benevolent and malicious intent. Email technology, inarguably one of the most significant developments in the history of human communication, also begat commercial spam, widespread phishing and a host of other annoyances both major and minor.

In recent months, the adult industry has been abuzz with talk about adware, its more nefarious cousin spyware and the effect each is having on the adult affiliate space. More than any other brand or product, the widely distributed adware product Zango has been the name on everybody's lips. Fairly or otherwise, Zango has become a symbol of dodgy — if not outright illegal — businesses practices in the adware market.

A Question of Definition
When discussing terms like adware, spyware or malware, it is very easy to begin using the terms interchangeably, a fact that drives distributors of ostensibly "legitimate" adware crazy.

One reason for the immediate conflation of the various 'ware' terms is that there remains much disagreement even among experts concerning the point at which adware becomes something more than just a "software package which automatically plays, displays or downloads advertising material to a computer after the software is installed on it or while the application is being used," to draw on the Wikipedia definition.

Distributors of adware, like Zango, draw a bright line that distinguishes their products from true spyware or malware, and are quick to assert that their products supply a useful service based for consumers, and are not designed to collect and exploit sensitive data obtained from unwitting and unwilling end users.

"The bottom line for your readers is that adware is not spyware — period, end of story," Steve Stratz, director of public relations for Zango, told XBIZ. "If you want to get a little more granular, spyware is software that collects personal information without the user's knowledge, by logging a user's keystrokes, for example."

Adware, on the other hand, is "an application that delivers advertising to the desktop, but may not collect personally identifiable information (PII)," as Stratz defines it.

Stratz also noted that "adware, by contrast, when installed with the user's 'express consent' — defined by the Federal Trade Commission as a plain-language notice, separate from the End User License Agreement (EULA), that when agreed to by the consumer ensures that she is willingly downloading the software — is the legitimate player in the space."

The fact that Stratz referenced the FTC's definition of "express consent" is not surprising, given the settlement entered into by Zango and the FTC late last year. One of the main areas of concern for the FTC in crafting the agreement was the question of user consent and notification with respect to downloads and installations of Zango.

Stratz characterized the FTC action and subsequent settlement negotiation with Zango as "a painful but very good process of rebuilding" the software and the way in which it functions.

Some critics, including noted spyware and adware expert Ben Edelman, argue that the agreement between Zango and the FTC wasn't painful enough.

"It was more or less a rubber stamp," Edelman told XBIZ.

Adware, Traffic Market
For those in search of well-documented data on adware and spyware, is an indispensable bookmark. Through an extensive collection of court documents, white papers, screenshots and videos, Edelman chronicles his exhaustive research into numerous widely distributed programs.

Edelman, who served as an expert witness for plaintiffs against the Gator Corporation and strongly opposed approval of the FTC settlement with Zango, concedes that he takes a hard line with respect to adware.

Asked if there was any such thing as "good adware," Edelman responded that the answer "depends on your definition of adware … but I can't think of any program that displays pop-up ads that is 'good.'"

Obtrusive though they may be, pop-up ads are far from the biggest problem that Edelman has documented in his research. From surreptitious downloads and misleading EULA terms to affiliate commission hijacking and delivery of malicious exploits, Edelman has observed a dizzying array of schemes and scams executed over the years.

Among the more subtle negative impacts of some adware is what Edelman refers to as the "self-targeting scam."

"Putting spyware vendors' practices in the best possible light, they perform a comparative advertising function — offering a competitor when a user browses a merchant's site," Edelman stated in recent entry on his website. "But suppose a spyware vendor instead shows a 'competitor' that is actually just a commission-earning link to the very site the user had specifically requested."

As an example, Edelman points to a series of events captured by the automated testing system he uses to monitor the operation of Zango. On May 13, the testing system attempted to browse the website. Zango then opened a pop-up sending traffic to Roundads then redirected to Performics, and then back to Blockbuster.

"To a typical user, this popup is easy to ignore — just a second copy of the Blockbuster site, which users had requested in the first place," Edelman wrote. "But the pop-up has serious cost implications for Blockbuster: If the user signs up with Blockbuster, through either window, then Blockbuster concludes it should pay an $18 commission to Roundads via Performics.

"That's a sham: Were it not for Zango's intervention, Blockbuster could have kept the entirety of the user's subscription fee, without paying any commission at all."

Edelman asserts that Zango's role in the Blockbuster example "doesn't even meet the definition of advertising — attracting public attention to a product or business."

"After all, the user was already at Blockbuster," Edelman said, "and hence can't be said to have been 'attracted' to that site by Zango's action."

Tip of the Iceberg
While Zango is the most-recognized adware brand within the adult space, thanks in large part to an intense anti- Zango campaign by a relatively small but very vocal set of message board crusaders, analysts generally agree that Zango is far from the most problematic for affiliates and advertisers.

Zango is just a tangible, articulated example of a much larger problem," said Scott Rabinowitz, CEO of Traffic Dude, adding that the impact extends well beyond the adult entertainment sector.

"In aggregate, adware has had less effect on the adult industry than it has in mainstream," Rabinowitz said.

Whether it is the sort of artificial cost inflation introduced by the self-targeting scam observed by Edelman, redirection of traffic to sites other than the ones surfers attempt to visit, or the overwriting of cookies in furtherance of commission hijacking, Rabinowitz said the traffic buyer has nearly as much to fear in these programs as the surfer does.

"The ad buyer gets fucked the most, potentially," Rabinowitz said. Edelman concurred with Rabinowitz that Zango is merely the tip of the proverbial iceberg, and new varieties of adware and spyware are being developed constantly.

"They're coming from everywhere," Edelman said. "Many are coming from outside the U.S., many others purportedly come from outside the U.S., but I believe have some connection to the U.S."

Some of the other programs that Edelman is keeping an eye on include Surf Sidekick, TargetSaver, Look2Me and Command Desktop Advertiser.

Much has been made of the practice of 'targeting' specific domain names and brand names by adware distributors, and the selling of such names as biddable keywords that can be purchased by competitors of the name-holders. Many site owners and webmasters alike have asked the same question — what can I do about it?

Adult industry attorney Rob Apgood told XBIZ that the form of action that a domain owner can take depends on whether the owner has registered their domain as a trademark.

"If the domain being targeted is a registered trademark, then I would write a cease and desist letter threatening legal action based on trademark infringement and dilution," Apgood said. "If there is no registered trademark, then I would go with a common law trademark claim of trade dress infringement."

If the threat fails, would the legal argument work? Edelman, who in addition to his Internet-related research also is a member of the Massachusetts State Bar, said that it's very difficult to predict the outcome of such a trademark- based lawsuit in the current legal environment.

"It's a fair argument; unfortunately, you almost have to sue for an answer," Edelman said, adding that actions against adware and spyware makers in U.S. courts have had mixed results.

Still, Edelman says, it's worth a shot.

"Demand letters are not a crazy way to proceed," Edelman said.

Rabinowitz concurred with Edelman, saying that the courts have not been particularly effective. "It might take an act of Congress," Rabinowitz said.

Even so, Rabinowitz noted that he advises clients to avoid purchasing traffic from adware distributors, and from brokers that accept adware on their network, in part due to concern over what he calls "several layers of copyright infringement."

According to Apgood, Rabinowitz is offering his clients sound advice. "I've advised my clients not to use or purchase traffic from Zango as well," Apgood said.

A New Approach?
Although Rabinowitz said that he advises his clients not to purchase traffic from brokers that accept or resell adware traffic, he does not think there's no such thing as a good application of adware.

"I think we need to refocus the discussion," Rabinowitz said of the ongoing adware debate within the online adult industry. "As long as it is above board, with absolute clarity to the end users, it can be used for good."

Stratz contends that Zango is already being used for good, providing users with videos, games and valuable opportunities through its contextual advertising methods. Far from a bad apple in the adware bunch, Stratz said Zango is a cut above the rest.

"As you may know, Zango's notice, consent, advertising labeling and easy uninstallation practices lead the online downloadable software space," Stratz said. "Adware provided by a desktop advertising company that knows and follows the emerging industry guidelines is as good an ad-delivery vehicle as presently exists."

Call him a skeptic, but Edelman is not convinced.

In repeatedly pointing to elements of notice, user consent and other areas that were of prime concern in the company's settlement with the FTC, Edelman asserted, Zango is glossing over their software's other problematic aspects.

"Things like the Blockbuster incident I documented are not hard to find," Edelman said. "They are doing this quite widely; maybe they think it is their right to steal from merchants?"

Whatever the future of the 'wares,' one thing seems certain; adware and its more problematic cousin spyware are not going away any time soon as advertising delivery vehicles. For one thing, despite all the concern and consternation expressed about adware, there's no shortage of people willing to purchase the traffic it generates.

"The very fact that Zango still exists means that somebody — or thousands of somebodys, rather — is using it," Rabinowitz said.

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