Kerber of WurldMedia Indicted Again

July 24, 2008 Filed under: Adware, Affiliate Marketing, Legal Issues — Kellie AFP @ 10:36 am

A grand jury has handed down another indictment against Gregory Kerber, former chief executive of WurldMedia. This time the indictment is for grand larceny in the third degree. The allegations are that Kerber transferred $30,000 from Buyersport to his personal account.

Kerber was indicted last year under separate charges related to the sale of WurldMedia to Roo. At that time I commented that hopefully a deeper look would be taken into the financial goings on at Buyersport. It would appear that has indeed happened, although not exactly along the lines I mentioned. On the other hand, all the details haven’t been made publicly yet.

While Kerber has settled the charges from last year, pleading guilty to one of the counts, his legal woes made not be over yet. is reporting that Kerber and his wife filed for Chapter 13 bankruptcy last month. that the Saratoga District Attorney’s office is working closely with the US Attorney’s Office in the exploration of a possible criminal case that falls outside of the Saratoga’s District Attorney’s office.

Proposed Settlement In ValueClick/CJ Adware Class Action Lawsuit

July 6, 2008 Filed under: Adware, Affiliate Marketing, Legal Issues — Kellie AFP @ 6:21 pm

A proposed settlement has been reached and preliminarily approved in the class action lawsuits on behalf of publishers and advertisers against ValueClick/CJ. The cases centered on the presence of adware in CJ/BF and the impact on both publishers and advertisers. The two cases were consolidated earlier this year by the courts and the settlement covers both cases.

A court date of January 2009 has been set for a Fairness Hearing to determine if the settlement will have final approval by the court.

I’m posting two documents obtained through the courts which give detailed information regarding the settlement and the procedures which will follow.

[Propsed] Order Preliminarily Approving Settlement, Prelimanily Certifying Classes, And Providing For Notice 

Exhibit A: Agreement For Settlement Of Carrier And NAR Litigation

VCLK/CJ deny all allegations in both cases but agree to the following settlement (summarized):

1. $1 Million to be paid into a Common Settlement Fund. Both Advertisers and Publishers will be compensated from this fund. Thirty (30) percent of the fund will be allocated to Advertisers and seventy (70) percent to Publishers of the class. The first document linked above defines both classes and outlines how the fund will be dispersed.

2. An independent audit of CJ’s Network Quality practices and efforts related to detection, prevention and response to third parties using software to force or hijack clicks on CJ. The Auditor will submit a report and make recommendations on how CJ can improve and enhance Network Quality practices. The parties will then issue a statement to Class Members summarizing the measures to be implemented by CJ in response to the Audit and report.

3. CJ will begin tracking additional data/information and will implement enhancements of its primary investigative tools and automated software investigative tools. This additional data includes (quoted from the Settlement Agreement):

49. Tracking of Additional Data and Information: Defendants agree that no later than 30 days after the date that the Court approves the Parties’ Stipulation for Dismissal and dismisses the Action with prejudice, CJ will supplement its existing detection procedures and practices by implementing systems responsible for tracking the following categories of data and information:

A. Prior Publisher Investigations: CJ will design and implement fields and/or tables in its database that identify and record: 1) the number of instances on which any publisher has been assigned a “fraud role” or has been under investigation for the potential use of malicious software to “force” or “hijack” clicks; 2) the time period of each such investigation; 3) the CJ employee(s) responsible for conducting the investigation; and 4) the outcome of the investigation. CJ agrees to maintain such information for a period of no less than 3 years.

B. Termination/Deactivation Codes: CJ will design and implement detailed codes identifying the specific reason(s) that a particular publisher was deactivated or terminated from its network, including specific codes identifying whether a publisher was terminated for “forcing” or “hijacking” clicks using malicious software. CJ agrees to record and preserve such reason codes for each publisher deactivated or terminated from its network for a period of no less than 3 years following such deactivation or termination.

C. Software Testing: CJ will design and implement a database and/or table identifying all software that is manually tested or investigated by CJ to determine whether it is being utilized to “force” or “hijack” clicks, and for each such software application, will record in such database and/or table: 1) the particular software application tested; 2) the time, date and manner in which such software was tested; 3) any publishers determined to be using such software; and 4) the conclusions of the testing. CJ agrees to record and preserve such information for a period of no less than 3 years.

50. Primary Investigative Tools: Defendants agree that no later than 30 days after the date that the Court approves the Parties’ Stipulation for Dismissal, and dismisses the Action with prejudice, it will implement the following enhancements to its Network Quality procedures:

A. CJ will continue to circulate to all members of its Network Quality team a daily “hijack report” identifying all instances of two clicks for the same end user being dropped within five seconds of each other, and will assign a member of its Network Quality team to be principally responsible for reviewing daily “hijack” reports and for investigating instances of potential click “hijacking” based on such reports.

B. CJ will begin to circulate a weekly “high conversion report” to all members of its Network Quality team identifying all publishers with a lifetime conversion ratio greater than 30% and a percentage of “null” referring URLs greater than 50%, and will assign a member of its Network Quality team to be principally responsible for reviewing weekly “high conversion reports” and for investigating instances of potential “forced” clicks using malicious software based on such reports.

C. CJ will agree to consider in good faith implementing any additional investigative reports or tools recommended by the auditor to assist in its efforts to detect forced click and hijacking activity.

51. Automated Software Investigative Tool: Defendants agree that no later than 30 days after the date that the Court approves the Parties’ Stipulation for Dismissal and dismisses the Action with prejudice, CJ will implement an automated testing protocol utilizing a proprietary software tool designed to detect particular publishers’ use of known malicious software applications. The tool will run on a continuous basis, and the independent auditor will be permitted to evaluate the automated tool and to make recommendations concerning the design and implementation of the automated tool in his or her Report.

52. Preservation of Publisher Data During Publisher Investigations: Defendants agree that no later than 30 days after the date that the Court approves the Parties’ Stipulation for Dismissal and dismisses the Action with prejudice, CJ will implement an automated system for preserving all “click data” associated with a particular publisher during any period of time that such publisher is under investigation for the potential use of malicious software to “force” or “hijack” clicks on CJ’s network. Notwithstanding the foregoing, no failure to preserve such data during the pendency of any such investigation shall be admissible to establish liability or breach of any discovery obligation in any collateral litigation, and no inadvertent failure to preserve such data shall give rise to any claim for breach of this Settlement Agreement.

The agreements with regards to compliance efforts are more significant than the amount of dollars reached in the settlement, in my opinion. I am glad to see such issues addressed in the agreement.

More information regarding who is included in the classes, procedures for opting out of the settlement and mechanisms for opposing the settlement terms can be found in the documents linked at the beginning of this post.

More information regarding who is included in the classes, procedures for opting out of the settlement and mechanisms for opposing the settlement terms can be found in the documents linked at the beginning of this post.

Major Loyalty Affiliates Hit With Patent Infringement Lawsuit

January 31, 2008 Filed under: Affiliate Marketing, Legal Issues — Kellie AFP @ 9:47 pm

It seems that a lawsuit was filed in Texas Eastern District Court on January 23, 2007 by Source Inc. alleging patent infringement related to a “Centralized Consumer Cash Value Accumulation System for Multiple Merchants”. Translation: loyalty/rebate system. Source Inc is saying they have the patent of others doing loyalty/rebate systems are infringing on their patent.

Listed as defendants in the suit are:

Access Development Corporation, Inc.
Belcaro Group, Inc. (ShopAtHome)
Big Co-Op, Inc.
Intefral Technologies, Inc.
77BlueLLC (David Lewis)
Ebates, Inc.
Electronic Scrip Incorporated
The Ezshoppen Company, Inc. (Tim Storm) Holdings, LLC,
JellyFish, Inc. (recently purchased by M$)
Jet Set Joe Corporation
Little Grad, Inc.
MBC Direct, LLC
Mall Networks, Inc., Inc.
Mezl Media, Inc. (owned by ValueClick)
Mothers Work, Inc.
OC Rebates
Pinnacle Communications International, Inc.
Qdeals, Inc.
QuickRewards Network, Inc.
Simplicity Group, LLC Corporation
Tricordia, LLC
Tuition Fund, LLC, Inc.
Zions First National Bank
Alliance Card, Inc.
Family Network, Inc.
JPMorgan Chase & Co.
Golden Retriver Systems, LLC
Summit State Bank
Nietech Corporation
U.S. Bancorp
U.S. Bank

I’m sure many will recognize several of the thirty-eight defendents on that list. Source Inc may not be done with the list of defendents yet as there is mention of “similar programs whose identities are not yet known”.

Source Inc is also seeking an injunction against each defendent.

Ok, so patent cases are filed, won and lost every day. But “wow” was my initial reaction.

I’m not sure if they are naming any loyalty/rebate program which tracks across multiple merchants or just ones with certain technology or what.

I haven’t read through the patents yet, but this is certainly going to be interesting.

The SouthEast Texas Record (the content on this page may change. Scroll down to Source Inc vs Access Development Corp. et al)
US Patent Office Search Returns

What Became of ExactAdvertising?

January 28, 2008 Filed under: Adware, Affiliate Marketing, Legal Issues — Kellie AFP @ 1:13 pm

ExactAdvertisng…remember them? They were behind such lovely adware applications as BargainBuddy (contextual pop-up application like Zango), CashBackBuddy (rebate reminder software), ExactSearch (PPCSE toolbar) and Bullseye Network (BargainBuddy rebranded).

I’ve noticed in the last year or so that several of their adware applications have been dead in the water so to speak. Installation web sites owned by ExactAdvertising were still up and had downloads available, but the adware did not function when installed. I wondered what was going on. Did they decide to pull out of the adware business or was something else happening? (more…) and the FTC

December 7, 2007 Filed under: Adware, Affiliate Marketing, Legal Issues — Kellie AFP @ 12:23 pm

News of yet another settlement between a government agency related to adware. This time it’s AdultFriendFinder and the FTC. Maybe I need to start tagging these as “chickens coming home to roost.”

AdultFriendFinder and the FTC have reached a settlement over consumers being “pelted” with sexually explicit ads. The short story is the FTC says AdultFriendFinder delivered sexually explicit ads to it’s network of sites to consumers who weren’t looking for such and that’s against the federal law. AFF can’t do that anymore, either themselves or by their affiiates. From the FTC press release:

“Such ads were displayed to consumers who were searching online using terms such as “flowers,” “travel,” and “vacations.” In some cases, defendant’s sexually explicit ads were distributed using spyware and adware.” (more…)

Wurld Media Saga Continues

December 7, 2007 Filed under: Adware, Editorials, Legal Issues — Kellie AFP @ 10:27 am

Larry Rulison. over at the, has more to report this morning in the continuing indictment of two top WurldMedia executive. It seems to Gregory Kerber, former CEO of Wurld Media, is still employeed by the ROO Group, the publicly traded company who purchased Wurld Media this summer for $4.3 million. Kerber was hired by ROO after the purchase of Wurld Media as a senior vice-president of business development.

I wonder if Kerber had anything to do with all those pop-ups of I was getting through adware? Adware inventory buys can be a pretty quick and cheap way to get a site’s traffic figures up when setting those good ole Rate Card prices for advertising on the site. Anyway, back to the Friday fun provided by Larry….

It seems a reporter from TimesUnion went to the offices of Roo, as a good reporter should, and those offices were located in a “nondescript building” with a locked front door. They did have a couch and Christmas tree in the front lobby behind that locked door though. Eh….Merry Christmas.  

Evidently, the Saratoga District Attorney’s office is still being a bit tight lipped on the specifics of charges brought against Kerber and Saxton. According to Times Untion, Assistand Distric Attorney of Saratoga did say

“The grand larceny and money laundering charges center on “certain financial transactions that occurred” related to the distribution of the proceeds from the sale to ROO earlier this year, Wendling said……Wendling would not say where authorities believe the proceeds ended up, although he said it was another entity separate from Wurld.”

My curiosity is piqued. I wonder if it ended up in the Lexy Foundation? No, that’s not news only me being tongue in cheek because it’s Friday. But those who were in affiliate marketing back in the early days of WurldMedia, Morpheus and Buyersport should remember about the Lexy Foundation. Just in case something changes on the site in the future:

Lexy Foundation

Formed by the founders of Wurld Media….to assist the sick, disabled, downhearted, and poor. It was also used to justify the Buyersport software claiming the traffic of other affiliate’s as their own. Even when the software was just getting installed by users of Morpheus who were really just interested is being able to download free music, movies, software, etc. That downhearted part always did make me laugh. All those halos in the logo and with mouse-over of the menu seem pretty funny right now as well.

I do hope that during all this investigating going on that some official probing has happened or will happen into the Lexy Foundation as well. All considered, just to be sure that everything is on the up and up with the nonprofit.

I’ll continue to be watching as all of this progresses and more specific information regarding the charges become public record.

Wurld Media Execs Facing 50 Years Jail Time

December 3, 2007 Filed under: Adware, Legal Issues — Kellie AFP @ 10:41 am

Yet another adware company is facing legal woes. It looks like the stuff has hit the fan for Wurld Media. The CEO, Gregory Kerber, and the CFO, Richard Saxton, were arraigned on Friday on a number of felony and misdemeanor charges. The charges include second-degree grand larceny, third-degree grand larceny, fourth-degree money laundering, first-degree falisifying business records, first-degree offering a false instrument for filing, failure to pay benefits, second degree criminal contempt and failure to withhold income taxes. This follows a seven month investigation by Spa City police and State tax agency. The two face a possible 50 years in jail. (more…)

ValueClick/CJ/BF Classaction Lawsuit to Proceed

August 28, 2007 Filed under: Adware, Affiliate Marketing, Legal Issues — Kellie AFP @ 1:03 pm

It looks like a ruling was handed down yesterday on ValueClick’s motions to dismiss. From the web site of the plaintiff’s attorneys:

On August 27, 2007, the Honorable Florence-Marie Cooper issued two orders denying, in part, ValueClick’s Motions to Dismiss the Class Action Complaints. The Court held that Defendants failed to meet their burden of establishing that Plaintiffs could not proceed in the lawsuits.

The pdf’s of the ruling are available as well at:

SRC Motion To Dismiss Order
Carrier Motion To Dismiss Order

Lots of legalese. It looks like the cases will proceed. Additionally, it appears that the plaintiff’s will have te opportunity to amend one claim the judge moved to dismiss if they so chose. So that point may end up back in the claim in some form. At least, that’s what it appears to my non-legal mind towards the end of the Carrier MTD Order.

I’m still wondering if and when ValueClick (VCLK) and/or CJ will have any kind of public comment regarding these lawsuits.

AFP will continue to follow developments in these lawsuits as they progress.

The Risk of Ready-Made Mall Sites

August 23, 2007 Filed under: Affiliate Marketing, Legal Issues — Kellie AFP @ 7:31 am

Every Affiliate Manager has probably seen these sites come through their program for approval. It’s the ready-made mall sites that are sold as packages to people so they can make their millions on the Internet while they sleep. I’ve often heard Affiliate Managers ask whether there is any harm in accepting these types of sites into their program, even though they realize the sites are not likely to convert sales. It seems that there may indeed be risk in accepting these types of package deal sites into programs.

On August 21, 2007, the FTC issued a press release outlining the action taken against a company selling these types of mall sites to consumers. The investigation was conducted jointly by the FTC and the Arizona Attorney General’s Office and it appears the AG will be filing a parallel case.

The case was filed against The Results Group, LLC which sold affiliate sites and hosting to consumers as a business system for $99 to $599. They claimed that their system was generating over $50,000/month in commissions for some of their users. Yeah right. Anyone in this industry knows that is far from realistic. The Results Company would then pressure consumers into purchasing more “advertising” for the site they had purchased.

The FTC felt that consumers were provided with false and misleading information regarding The Results Group “turn-key” system. The upshot is that The Results Group will be returning about $435,000 to consumers and will give up thousands in cash which were the proceeds from the sale of luxury sports cars, the value of life insurance policies and a Las Vegas real estate deal. All of that sounds like the FTC hit them with “disgorgement of ill-gotten proceeds” legal whammy, which means they can go after those things purchased with money earned through a scam.

While less than half a million may seem like a bit trifling for the FTC go after, the order was for $19.5 million and $435,000 is the settlement amount. It sounds as if the FTC agreed to take whatever they could get based on current assets.

The FTC mentioned two merchants promoted through these web sites, Amazon and Overstock. While it is doubtful (or at least I would hope so) that the FTC or an AG would go after any of the merchants partnered with these types of mall site scams, there is a potential branding issue for merchants. As a merchant, do you really want your brand connected with such scams? Let alone even being mentioned in an FTC press release.

These types of scams can only exist because they have merchant affiliate relationships. Since anyone with half a brain in this industry knows that these types of sites just aren’t going to bring in any amount of revenue to write home about, it seems to be no reason to be connected with this type of business model at all.

My personal advice would be to hit the decline button and stay clear of such “turn-key” solutions.

FTC Receives Temporary Injunction Against EDebitPay and Freezing of Assests

August 8, 2007 Filed under: Affiliate Marketing, Legal Issues — Kellie AFP @ 9:29 am

The FTC recently received a court ordered temporary injunction against and the freezing of EDebitPay in regards to business practices related to their prepaid debit cards and short-term loans. My write up on the situation is bit lenghy based on the current available information, so I’ve posted it on my forum. You can see the full details here.

The gist of the allegations is that EdebitPay has been charging people a $159.99 fee for the debit cards without adequate disclosure, any disclosure and sometimes when they weren’t even applying for the prepaid card but a short-term loan.

These are very serious allegations and there are some indication it’s also been turned over to the FBI  (not surprising considering the allegations involved). If you have had any business dealings with EdebitPay, you probably want (or need) to stay abreast of this case.

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