• by Wendy Davis , Staff Writer @wendyndavis, November 3, 2006

Adware company Zango, previously known as 180solutions, has agreed to pay a $3 million fine to settle a complaint by the Federal Trade Commission.

The complaint, which came after more than a year's investigation and was made public this morning, accuses Zango of deceptive failure to adequately disclose adware, unfair installation of adware and unfair uninstall practices.

Zango, while not admitting any wrongdoing, also agreed to follow a set of procedures designed to prevent non-consensual installations of adware. For instance, the company agreed to maintain detailed information about any affiliates that install ad-serving software on its behalf. Zango also said it doesn't use "third-party" distributors--by which it means distributors it has no direct relationship with.

Consumer advocates have long complained about Zango's ad-serving software, which sends users pop-up ads based on the Web pages they visit. The Center for Democracy & Technology filed a complaint with the FTC in January but, until this morning, it hadn't been clear whether the FTC had taken any action against Zango--either in response to the complaint or on its own. In its complaint, the CDT alleged that Zango turned a blind eye to bad distribution practices by affiliates.

Now that the FTC and Zango have reached a tentative settlement, both the adware company and the CDT are declaring victory. "With this action, the FTC has again made clear that it is prepared to go after companies, regardless of size or market position, that engage in unfair and deceptive practices to distribute their products," Ari Schwartz, deputy director of the CDT said in a statement.

Zango also released a statement of its own, stating that it has "met or exceeded the key notice and consent standards detailed in the FTC consent order," since at least the beginning of this year. Zango also said that, as of Jan. 1, it retired past products and began using software that enables quicker detection of unauthorized installs.

Regardless, while the FTC has filed adware complaints before, this agreement appears to mark the first time it has publicly targeted one of the biggest players in the space. It certainly sends a message that companies need to at least monitor their affiliates if they're going to install software on consumers' desktops.