Prosecutor: Advertisers Must Monitor Online Distributors

Advertisers and marketers must be wary of fraud or deceptive practices committed by their affiliates, and even spammers or adware servers that they have no working relationships with, an attorney with the New York State Attorney General's office said Tuesday at a lecture in New York sponsored by TRUSTe and the International Association of Privacy Professionals.

Ken Dreifach, chief of the Internet bureau in the New York State Attorney General's office, said that even advertisers with layers of affiliate networks, sub-affiliate networks, and independent contractors can still be found liable if any link in the chain is found to have acted illegally. "You don't want to ever assume that the existence of intermediaries, whether it's two or six, is going to immunize you from liability," he said.

Dreifach's comments come at a time when consumer advocates and government watchdogs are increasingly targeting marketers that finance potentially problematic advertising methods. Last week, the non-profit Center for Democracy and Technology issued a report naming several of the large marketers to advertise on pop-ups served by adware company 180solutions--which the CDT has accused of turning a blind eye to distribution practices that result in adware installed without consumers' permission.

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FTC Commissioner Jonathan Leibowitz also stated in February that the agency was considering whether to name the marketers who use adware. "A little shaming here might go a long way," he told an audience at a conference organized by the Anti-Spyware Coalition and Center for Democracy and Technology.

Dreifach said that a marketer's liability could extend even to companies with which the advertiser has no business relationship at all. Apparent agents--spammers or adware companies using a brand's name in a fraudulent fashion--could potentially result in accusations against the marketer.

To avoid liability, Dreifach recommended that companies perform due diligence in examining the practices of their affiliates, sub-affiliates, and independent contractors. He suggested "seeding" e-mail lists with company addresses to ensure that the lists aren't being resold or spammed by mailers using false headers or sender IDs, and that companies download adware clients they contract to ensure their customers aren't being bombarded with ads.

"If you are sending stuff onto a consumer's computer, it's your responsibility to make sure the software you're using belongs there," he said. "And you want to avoid accepting benefits based on fraud or deception that you know about."

Dreifach mentioned e-mail marketing company Datran Media, which earlier this month agreed to pay $1.1 million to settle a breach of privacy investigation by Spitzer's office. Datran was under investigation for allegedly obtaining 6 million e-mail addresses from Gratis Internet and sending messages to those in-boxes, even though Gratis had promised consumers it wouldn't share their addresses. Spitzer's office sued Gratis for allegedly selling consumer data; Gratis denied the charges.

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