Two separate class action lawsuits were filed on April 20, 2007 against Commission Junction, BeFree and ValueClick. One names CJ and BeFree publishers (affiliates) as the plaintifs. The other names CJ and BeFree merchants as the plaintiffs. So what do these lawsuits center around? Adware.

The lawsuits allege breach of contract, negligence and unfair business practices on CJ/BF’s part by allowing adware affiliates to operate within their Network. The gist of it seems to be that CJ/BF has knowingly allowed adware affiliates within their Network which commit commission theft and fraudulent transactions through adware applications. The suit is seeking monetary damages to both affiliates and merchants. More importantly, in my opinion, they are seeking a change in ValueClick’s corporate policy related to adware and compliance. 

I’ve always hoped that Networks would wise up by implementing fair business practices and enforcing them. My views on the subject matter certainly aren’t an Industry Secret. Unfortunately, the changes haven’t happened. As I was thinking about this, I realized that the adware issues have been ongoing for 6 or 7 years now. Wow, time certainly does go by quickly. It probably hasn’t been a matter of if such a lawsuit would be brought against someone, but a matter of when. Well, it looks like the “when” is now here.

How this may impact the Industry as a whole, well I just don’t know. It’s certainly bound to shake some things up. And I can’t imagine that other Networks aren’t going to be watching this case closely. I can only hope this will result in some real postive change within the Industry. 

You can find more information on the case here.
A copy of the affiliate claim is here and a copy of the merchant claim is here.

As we feel these cases are important specifically to the affiliate marketing industry, more so than any other case related to adware/spyware to date, we will be dedicating a special area of this blog to information on these lawsuits as they progress. We will limit the posting to official sources and will avoid commentary and speculation.

In the online world, we come across terms and conditions and end-user licensing agreements all the time. We’re all busy and it’s so easy to just check the “I Agree” box and continue with our business. But there are times when TOS and EULA’s can be very enlightening. And they are legally binding agreements, so there is prudence in knowing what you are agreeing to in many situations. I came across this EULA the other day. I have to think it falls nicely into a EULA from hell. I have to wonder how many end users would still install the software if they a) read the EULA and b) understood it. This EULA is for some “free” P2P enhancement software that comes bundled with adware. The adware is put out by AdSingular, who does operate as an affiliate. Let’s take a look at this particular EULA and see what exactly the end-user is getting with this free ad-supported software.   (more…)

AffiliateFairPlay has just released a case study looking at the impact of contextual adware advertising in and on affiliate marketing. Many may be surprised by the findings and it may challenge some of the preconceptions about contextual adware.

We attempted to give a broader view of this type of advertising. We focused our testing on top internet retailers. We looked at such things as how many merchants were having pop-ups delivered over their sites, who were placing the ads, to what degree were affiliates responsible for the pop-ups, how many pop-ups involved forced clicks (or cookie stuffing), which networks were involved and to what degree.

From the results, it seems to me that as an industry we are not adequately addressing the issues and practices related to this type of advertising.

The full report can be found here.

Over the last couple of months we have seen a surgence of a company called AdverLinkz targeting small to mid-sized merchants through Zango. They seem to be an “ad network” that will deliver “high quality traffic” for their clients. Although, the information on their site is sketchy and I didn’t see any actual place for advertisers to join. I do find it comforting that they don’t send any traffic from botnets like their competitors though. Yep, I’m rolling my eyes over here. From Whois information, AdverLinkz seems to be related to Focus Interactive Outsourcing Corporation. This may site where they recruit clients and AdverLinkz the site where they are running the Zango campaigns.

What I’m seeing is that they are targeting small to mid-size merchants to deliver a pop-up of a competing web site. I’m assuming these are their clients. They frame the merchant’s web site on the Adverlinkz domain. I’ve documented numerous cases of the AdverLinkz pop-ups through Zango. In every case so far, they are specifically targeting the shopping cart URL to deliver the pop-up. The pop-up either covers a majority of or completely covers the shopping cart page of the merchant being targeted.

The impact to the merchant being targeted is the end user may potentially leave their web site, resulting in an abandoned shopping cart and lost sale. If the end user initially came to the merchant via an affiliate link, then it could result in a lower EPC and conversion rate in their affiliate program. Affiliates could also potentiallly see a lower conversion for merchants being targeted, depending on how effective the pop-ups are being.

I suspect that many of the merchants who are appearing in the pop-ups have no idea how their sites are being promoted and “traffic” delivered to them by AdverLinkz. They also appear to be running a not so small ad budget with Zango. Again, I’ve documented numerous merchants being targeted and it’s not like I’ve been specifically looking for AdverLinkz pop-ups. In a recent test run I performed, they delivered a pop-up on 20% of the URLs I tested and accounted for 50% of the total pop-ups by Zango I recorded. It appears that they may have started this activity sometime in February, at least through the AdverLinkz domain.

I am reporting all instances found to Merchants of my Service. My recommendation to those merchants who find themselves being targeted is to contact the merchant displayed in the pop-up directly. I do suspect that many merchants being displayed in the pop-ups are unaware they are being promoted through adware. If you are a Merchant and are experiencing a decrease in your conversions, then you may want to investigate if your shopping cart is being targeted for this activity.

In these days of Internet marketing, everyone should be careful of from where and how companies deliver traffic. It is a good idea to always keep a close eye own your own server logs to determine traffic sources.

Are you paying people who are members of organized crime or political extremist groups? Are you financially supporting criminals? I posted back in February that this was a developing story. At last it is here. The recording of Wayne Porter and Chris Boyd’s presentation at RSA2007. As a Network, Merchant, Manager, OPM or Affiliate why should you care about botnets, let alone the security folks who are chasing them?

Because this Industry is helping to fund them, from the hackers who own the botnet rings and are installing scripts to fill out lead gen forms to the adware applications they are installing through the botnets. And the money trail can lead to some pretty unsavory places.   

Listen and watch the presentation.
Botnet Live: Tracing, Chasing and Building the Case to Bust the Bad Guys

Can we continue to remain complacent? Apathetic? Are the standards in the Industry how much money someone is making regardless of how it’s being made?

Go ahead take the time to watch the presentation. Be prepared to have an eye opening experience about some of the things going on out there.

We’ve just released the first of our adware video tutorials. The purpose of the videos are to help educate the community to the impact that adware has on not only affiliate marketing but online advertising in general. The tutorials aren’t meant to focus on any one particular application or party, but rather are meant to educate in the fundamental issues surrounding adware.

The first series focuses on issues surrounding loyaltyware. Loyaltyware is a subset of adware which “assists” consumers in earning incentives if they forget to return to the incentivized site to start their shopping.

We have many more tutorials planned for the future. If you have any particular topics you would like to see, be sure to let us know.

And the award for the best rebranding of a company goes to……Media Traffic. It’s not just a renaming of a company, but also a shift in their business model. Where the Integrated Search Technologies (IST) products were toolbars, Media Traffic appears to be looking to become a direct contender with Zango. (more…)

FTC Press Release

The settlement calls for $1.5 million to be paid in fines for questionable installation and removal tactics of the DirectRevenue adware. There are also clauses regarding how the adware can be distributed in the future as well as ads being displayed through “legacy” installations.

The Commission vote to accept the settlement was 4-1. The dissenting vote came from Jon Leibowitz (who has publicly called for the reporting of advertisers using adware to shame those financially supporting adware) on the grounds he felt the monetary fines were to little, as DirectRevenue as profitted by more than $20 million.

Public comments are open to the FTC until March 21, 2007.

TRUSTe today announced their first whitelist of download software who passed their beta certification process.

Certified software on their list include:

CamFrog Video Chat 3.81 (Camshare LLC)
Coupon Bar 5.0 (Coupons, Inc.)
Coupon Printer 3.3 (Coupons, Inc.)
Crawler Toolbar 4.5.0 (Crawler LLC)
Illumio 1.2.73 (Tacit Software, Inc.)
MostFun 1.0 (NeoEdge)
Save/SaveNow 4.0 (whenU)
Vomba 1.2.0.0 (Vomba Network Inc.)

TRUSTe states in the press release regarding their beta certification:

quote:
The program sponsors, representing leading content and search providers, anti-spyware vendors and online advertisers, offer market incentives for downloadable software publishers to get certified. AOL, CA, CNET Networks, Microsoft, Verizon and Yahoo! will use the whitelist as a tool to help make business decisions related to advertising, partnering and distributing software products. By providing a whitelist of trusted applications, the program aims to provide attractive market incentives to software publishers to meet the requirements and earn certification.

Some may remember questions raised regarding TRUSTe Privacy certification process. Carolyn Hodge then answered fourteen questions posed by Wayne arising from the controversy. In her responses, Carolyn mentions the Download Certification program that was then in the works.

More to come on this I’m sure.

On the plane to the Affiliate Summit, I was reading my January/February issue of Revenue. I was somewhat astounded by some quotes in the Out of Commission article. I’ve watching to see if any talk was stirred up in the community over specific quotes. Either I’ve missed the talk or no one is talking about it, so here I go with my opinions. (more…)