Direct Revenue
From Wikipedia, the free encyclopedia
Direct Revenue was a New York City company founded in 2002 and funded by Insight Venture Partners[1], known for creating adware programs. Direct Revenue included Soho Digital and Soho Digital International. Direct Revenue's competitors included Claria, When-U, Ask.com and products created by 360i. The company's major clients included Priceline, Travelocity, American Express, and Ford Motors. Direct Revenue's largest distributors were Advertising.com (acquired by AOL) and 247 Media (acquired by WPP). As of October 2007, Direct Revenue has closed its doors.
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[edit] OAG Suit Against Direct Revenue
On April 4, 2006, New York state Attorney General Elliot Spitzer filed suit against DirectRevenue in New York County Supreme Court, alleging that the company's software distribution practices violates New York's General Business Law. [2]
In March 2008, Direct Revenue was granted a complete motion to dismiss on all of the OAG's allegations and the case was dismissed.
In People v. Direct Revenue LLC, No. 401325/06 (N.Y. Sup.Ct., N.Y. Cty., March 12, 2008), a New York trial court dismissed the entirety of the state attorney general's deceptive and illegal business practices case against Direct Revenue, a distributor of software (a downloadable "adware" client) that displays pop-up advertising on Web browsers. The attorney general sought billions of dollars in penalties against Direct Revenue, seeking to assert the rights of millions of unidentified consumers across the country who installed the Direct Revenue adware client.
The state's undoing was Direct Revenue's end-user license agreement, a click contract, and Direct Revenue's agreement with its distributors, which called for fair and lawful distribution of the Direct Revenue adware client.
Twenty-nine transactions with Direct Revenue or its distributors were alleged. As for those transactions where the attorney general's investigator dealt directly with Direct Revenue, the installation of the adware client was preceded by a license agreement that explained how the adware client operated and how to uninstall it; the agreement also explained the limitations on Direct Revenue's liability. In each case, the investigator clicked "Yes" on a button, indicating assent to the agreement.
As for those installations that were initiated by Direct Revenue's third-party distributors, there were problems with some (for example, the license agreement and uninstall instructions were not always displayed prior to installation). However, the court held that Direct Revenue was protected by its Standard Distribution Agreement, a document that directed the third-party distributors to obtain legally valid affirmative consent and make all legally necessary disclosures prior to installation of the adware client.
Having turned back claims based on the 29 transactions engaged in by state investigators, the court said there was no basis to entertain the attorney general's claims on behalf of all other individuals who allegedly downloaded the Direct Revenue adware client. Finally, it held, disgorgement of profits would not be an appropriate remedy in this case, since Direct Revenue distributed its adware client for free and it took nothing of value from the consumers who downloaded it. [3]
On February 16, 2007, DirectRevenue settled with The Federal Trade Commission without admitting to any wrong doing, and is barred from using affiliates who engage in 'drive-by downloads' or what the FTC deems deceptive practices. They will also pay a settlement of "$1.5 Million." [4] [5] On June 26, 2007 the FTC issued final approval of the $1.5 million settlement.[6] "No portion of the payment shall be deemed a payment of any fine, penalty, or punitive assessment." Direct Revenue closed down several months later, in part due to this fine [7]
[edit] OAG Case Analysis
In the case of People v. Direct Revenue, the New York Attorney General in 2008 attempted to nail Direct Revenue for its distribution of software that served pop-up advertising software on consumers’ computers. Direct Revenue is in the advertising business. Its software client serves pop-up advertisements to consumer’s computer screens through the Internet. Direct Revenue does not charge fees to consumers. Instead, it charges fees to the companies whose products it advertises.
It is interesting to note that one line of attack by the New York Attorney General focused on Direct Revenue’s “click-wrapped” (where the user clicks on “I ACCEPT”) end user license agreement (EULA) and Direct Revenue’s alleged deceptive and illegal practices. The court granted Direct Revenue’s motion to dismiss the claims noting that sufficient disclosure was given in the EULA, and the required elements for an enforceable agreement were followed. Having failed with its first line of attack, New York’s additional line of attack focused on the customer agreements of Direct Revenue’s resellers in an attempt to hold Direct Revenue liable. The result was the same as with the EULA — Direct Revenue was held not liable.
New York conceded that Direct Revenue’s resellers were independent contractors rather than agents. Generally, a principal is not liable for acts of an independent contractor due to the lack of control over how the contractor’s work is performed. In addition, the court noted that Direct Revenue’s software distribution agreement required its distributors to obtain consent of consumers consistent with the EULA and prohibited distributors from holding themselves out as agents of Direct Revenue. New York argued that Direct Revenue should be liable because it’s servers interacted with the consumers’ computers in the software installation process. The court pointed out that participation in installation was not enough for liability in the absence of participation in deceptive conduct that induced the installation.
Finally, New York argued that Direct Revenue should be held liable for the actions of its resellers on the ground that Direct Revenue ratified the conduct of its resellers. The court ruled that mere knowledge of consumer complaints was insufficient to impose liability on Direct Revenue, especially in light of the fact that when Direct Revenue had actual knowledge of a reseller misconduct, it took steps to remedy the problem. [8]
[edit] Programs created
- Aurora
- BetterInternet
- MyPCTuneUp is the uninstaller that DirectRevenue provided for their software.
[edit] External links
- Direct Revenue official site
- Q&A With Direct Revenue's CEO
- Direct Revenue Appoints Chief Privacy Officer
- Chip Cooper's Analysis of the OAG Case
- McAfee SiteAdvisor ratings page
- The Plot To Hijack Your Computer BusinessWeek, July 17, 2006
- Spyware purveyor DirectRevenue closes down Security Focus - Published October 25, 2007
- Interview with an Adware Author - a former Direct Revenue programmer describes in detail the stealth and other ingenious techniques used by the company's software to disguise itself, remove competitor software and protect itself from being removed. Philosecurity - Published January 12, 2009.
