• by Wendy Davis , Staff Writer @wendyndavis, February 19, 2007

Former New York State Attorney General (and now Governor) Eliot Spitzer wasn't the only government official gunning for adware purveyor Direct Revenue. It turns out that the federal government also had some issues with the pop-up serving company, which allegedly installed its ad-serving software on people's computers without their informed consent.

In a complaint made public Friday, the Federal Trade Commission charged that Direct Revenue bundled its adware with other "lureware," like screensavers and games, without giving consumers adequate notice. "These installations forced consumers to receive numerous unwanted pop-up and other advertisements and usurped computer memory and other resources," stated the FTC in its complaint.

Direct Revenue agreed to pay $1.5 million to settle the FTC charges and also promised to refrain from downloading adware without consumers' consent, but didn't admit it had violated the law. The case in New York is still pending, though three of the marketers that used Direct Revenue to advertise -- Priceline, Travelocity and Cingular Wireless -- agreed to pay fines ranging from $30,000 to $35,000 in New York.

But the proposed FTC fine is the subject of some debate, with FTC commissioner Jon Leibowitz saying $1.5 million isn't enough, considering the harm that Direct Revenue allegedly caused. "Even apart from the hundreds of thousands of hours people spent closing all of these pop-up ads, how many people lost important data because respondents' malware crashed their computer?" he asked. "How many people junked perfectly good computers that were so burdened with unwanted adware that they were useless?"

What's more, he argued, if the company owners pocketed an estimated $23 million, as Business Week suggested last July, even a $1.5 million fine could leave the owners with a hefty profit. "[I]n cases like this, I would rather go to trial and risk losing than settle for a compromise that makes an FTC action just a cost of doing business."

The FTC will accept comments on the proposed settlement through March 21, after which it will decide whether to finalize the agreement.