Accused adware distributor Zango drops lawsuit against PC Tools

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Online media company and accused adware distributor Zango said Tuesday it will drop its case against PC Tools after alleging the anti-spyware provider unfairly blocked Zango software.

Zango said in a company blog post that it decided to withdraw the lawsuit because San Francisco-based PC Tools, maker of the popular Spyware Doctor application, "has made changes and no longer eliminates or blocks Zango software as it did previously."

"Prior to the filing of the lawsuit in May, PC Tools was literally and systematically eliminating a previous version of Zango software from consumers' machines without notice of any sort or any opportunity for consumers to object," Bellevue, Wash.-based Zango said.

PC Tools, with global headquarters in Australia, attributed the withdrawal to a federal court ruling in June that denied Zango's request for a temporary restraining order.

"It appears that Zango has realized they were not going to prevail in this matter and the case has been withdrawn on that basis," Simon Clausen, chief executive officer for PC Tools, said in a statement Tuesday. "We believe the case should not have been brought in the first place."

Zango offered no apologies, saying the case "could be reinstated…if necessary."

"Going forward, however, we hope to focus on working proactively with scanning application companies," Zango continued. "After all, security, safety and consumer privacy are of utmost importance to both the scanning application and desktop advertising industries."

A Zango spokesman today declined to further comment, referring all inquiries to the blog post.

This is not the first time Zango has been in the middle of a dispute over its software.

Last year, Zango, formerly named 180solutions, agreed to pay back $3 million in ill-gotten gains after settling a case with Federal Trade Commission. The agency charged that Zango used deceptive practices to download adware on users' PCs and prevented them from removing it.

The FTC accused Zango of offering customers free web content, such as screensavers, games and peer-to-peer file-sharing software, without telling them it also contained adware. The adware, provided by third-party affiliates, allegedly monitored the consumers' browsing habits in order to display targeted pop-up ads, the FTC said.

At the time, Zango apologized to its customers, saying it relied too heavily on the third-party providers to enforce customer consent policies. The company said it would implement new standards required by the FTC.

But in July, spyware researcher Benjamin Edelman published a report that said Zango continues to install pop-up ads without proper disclosure to consumers. Zango, in another blog post, refuted the claims, saying the company "remains in compliance with the consent agreement it reached with the FTC."


Click here to email reporter Dan Kaplan.

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