Direct Revenue Settles Adware Suit

Reformed adware vendor Direct Revenue has agreed to settle a class action lawsuit filed in federal court in Illinois.

The settlement terms include continuing certain consumer practices regarding distribution, branding and consumer notification, some of which were implemented after the suit was filed in March 2005, and also implementing some new practices, according to a statement from the company. Direct Revenue will also pay $300,000 in attorneys’ fees and costs.

“The settlement embraces the basic tenets of Direct Revenue’s current consumer policies. We believe it further validates my client’s commitment to leading its industry with regard to the important issues of consumer notice and consent,” said Neal Klausner, a partner at Davis & Gilbert, the law firm representing Direct Revenue.

The agreement addresses areas of consumer consent, privacy, and opt-out options for consumers who do not wish to view advertisements. The company will continue policies implemented last year, including obtaining explicit and affirmative consent before installing any software; not collecting and personally identifiable information (PII); making it easy to uninstall the software once it’s installed; and refraining from distributing its software on sites that primarily target children.

New practices Direct Revenue has agreed to put in place for Illinois residents include creating a toll-free number with pre-recorded uninstall instructions; live telephone customer support for visually impaired users; and labeling its ads as “advertisements” instead of the previously used “offers.”

The case, Sotelo v. Direct Revenue, was filed in state court last March by Illinois resident Stephen Sotelo against Direct Revenue and its advertisers, and moved to federal court in the Northern District of Illinois in Chicago in August. The settlement has received preliminary approval from Judge Virginia Kendall, who will hold a hearing on April 24 where she will consider granting her final approval of the settlement.

Direct Revenue includes Best Offers Network and Soho Digital. The lawsuit alleged the company deceptively bundled its application with free software, which tracked users’ browsing habits and served targeted pop-up ads which bypassed common pop-up blocking software.

As adware and pop-up ads fell into increasing disfavor, Direct Revenue followed the path of similar vendors in announcing plans in November to build a behavioral targeting network, as Claria did with its BehaviorLink Network nine months earlier. The company laid off over 40 employees in August.

A similar lawsuit filed in Illinois in Septemberagainst adware vendor 180solutions is still pending.

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