security – Page 6 – Ben Edelman

March 9, 2009December 2, 2023

In Support of Utah’s HB450

When a user searches for Hertz, may a search engine show ads for Avis instead?* A natural libertarian instinct might reply yes, sure, do whatever you want. I want to push back on that, offering reasons why such ads are improper.

Modern search engines are notable for their striking ability to give users exactly what they ask for. Search for Hertz, and most of the links will indeed take you to Hertz or bona fide Hertz-related sites (like booking agents or consumer reviews). In this context, what is a user to think when a search engine serves up an ad for something altogether different from a user’s request? Because search engines are generally so good at providing just what users requested, there’s likely user confusion any time a search engine instead replies with links to competitors. After all, if a user asked for Hertz, it’s perfectly reasonable for the user to expect that resulting links will be responsive to the user’s request.

Now, search engines often say their ad labels cure any possible use confusion. I disagree. For one, the labels are easily overlooked — all the way off to the side, all the way in the corner. Moreover, while the words “sponsored links” may be clear to an attorney or an advertising professional, I’ve found that the wording is deeply ambiguous to ordinary users. Sponsored by whom? The search engine? The company the user just asked for? A different label, like “advertisements” or “paid advertisements” would be more effective in curing confusion. But that’s not on the table.

Meanwhile, litigation does not lend itself to resolving these questions. Consider typical litigation about these ads: Blow up an exemplar onto a big posterboard, analyze it from every angle, and discuss it for days on end. The very process of litigating the case makes it amply clearly what’s going on. So it’s hard for a court to get into the mindset of an ordinary user who’s confused, who didn’t know what “sponsored links” meant, and who didn’t really see that label in any case. In this context, it comes as no great surprise that US courts reach mixed results on the question of whether a search engine may show ads for one company when a user requests a direct competitor. European courts, for whatever it’s worth, tend to say search engines must not do so.

Search engines also often claim users benefit from ads for competitors. I guess it’s possible that some users might search for Hertz, not knowing that Avis even exists. But how many users does this really describe? If a consumer actually wants offers from multiple providers, those are easy to get; just search for “car rental” or “rental car deals” to get plenty of choices. In contrast, as described above, when a user searches for a specific provider, competitors’ ads are more likely to be confusing, and less likely to be useful.

Despite lofty claims about consumer benefits, I’ve always thought search engines let advertisers bid on each others’ trademarks for one simple reason: Money. If the only advertiser allowed to bid on ads for “Hertz” is Hertz, a search engine won’t be able to sell many ads. (They’ll sell at most one, to Hertz. But even that one will garner a low price, reflecting that Hertz did not have to outbid anyone else. Furthermore, why should Hertz buy an ad for its own trademark, when it already gets top position through organic listings?) In contrast, if a search engine can get ten different car rental advertisers competing for slots, revenues will increase dramatically. (See my revenue analyses through simulations and counterfactuals.) Now, I don’t mean to say increasing revenue isn’t a laudable goal for search engines. But the financial implications frame my assessment of search engines’ arguments. They say “consumers” and “competition”; I hear “revenues” and “profits.”

The HB450 Approach

Against that backdrop, Utah offers HB450 which seeks to provide an alternative. In those narrow circumstances when Utah has proper cause to regulate — among the key conditions, an advertiser using a search service that knows users are in Utah — Utah would require that advertisers not trigger ads based on competitors’ trademarks. The results? Less confusion for consumers who just want to get what they asked for. Plus, companies can reap where they’ve sowed. If a company invests in offline advertising (like ads on TV or in newspapers) to get users to search for its brand, those searches will show the company’s ads, not offers from competitors. It’s a perfectly natural, sensible approach.

Indeed, HB450 is a narrow approach. HB450 imposes no possible liability on search engines, no matter what. Rather, HB450 applies only to advertisers. Furthermore, an advertiser’s duty under HB450 is only to take down the offending ads, and even that only after notice. In addition, HB450 grants a successful plaintiff no monetary damages; HB450 allows only an injunction requiring that a defendant take down the offending ads, and attorneys fees to cover the cost of the action, but no further payments. In short, HB450 uses a minimalist approach, grounded in private-sector self-regulation and companies notifying each other of ads they believe cross the line. Far from the intrusive morass Eric Goldman seems to envision, this is sensible and appropriate, protecting consumers from confusing or deceptive ads, and protecting advertisers from competitors trading on their good names.

Nor is HB450 any kind of comprehensive Internet regulation, as AT&T spokesman claimed in statements to ClickZ. Trademark law and consumer protection are both traditional subjects of state regulation, and there’s no reason why states’ advertising regulations shouldn’t apply online too — particularly as geolocation systems become increasingly widespread and as it therefore becomes feasible, indeed easy and the norm, to present ads differently in one state versus in others.

In due course, I’d like to see federal regulation expand HB450 to national scope. After all, HB450’s protections ought not be limited to consumers and advertisers in Utah, and it would be perfectly natural to offer HB450 nationwide. But it’s perfectly normal for new regulatory approaches to begin in individual states — letting experience in a few states guide the decision to expand more broadly. That’s an appropriate approach here, and my hope is that that’s what will happen.

* – My Hertz/Avis example is purely hypothetical. While many advertisers ads targeting competitors’ trademarks, I do not mean to suggest that Avis does so.

January 1, 2009December 2, 2023

Adverse Selection in Online ‘Trust’ Certifications

Edelman, Benjamin. “Adverse Selection in Online ‘Trust’ Certifications.” Proceedings of the International Conference on Electronic Commerce (2009): 205-212. (ACM International Conference Proceeding Series.)

Widely used online “trust” authorities issue certifications without substantial verification of recipients’ actual trustworthiness. This lax approach gives rise to adverse selection: the sites that seek and obtain trust certifications are actually less trustworthy than others. Using a new dataset on web site safety, I demonstrate that sites certified by the best-known authority, TRUSTe, are more than twice as likely to be untrustworthy as uncertified sites. This difference remains statistically and economically significant when restricted to “complex” commercial sites. In contrast, competing certification system BBBOnline imposes somewhat stricter requirements and appears to provide a certification of positive, albeit limited, value.

October 14, 2008December 2, 2023

Hydra Media’s Pop-Up Problem — Ten Examples

Late last month, I posted an example of Vomba using a Hydra Media affiliate link to defraud VistaPrint — charging VistaPrint for traffic VistaPrint would otherwise have received for free. This was only the second Hydra Media advertising fraud example I had posted on my public web site. (The first showed similar Blockbuster fraud in spring 2007.) So some might think Hydra Media doesn’t have a big adware, spyware problem. Indeed, that’s exactly what Hydra claimed in a comment to ReveNews.

Despite Hydra’s claims of appropriate and ethical behavior, my observations indicate the contrary. Looking back to June 2007, across all my AutoTester’s browsing, my AutoTester has seen a remarkable 1,343 instances of spyware sending traffic to/through Hydra Network — 56 incidents in the past two weeks alone.

Ten Specific Examples

Using my Automatic Spyware Tester, I recently found the following Hydra Media spyware/adware incidents.

Overwrites cookies of any other affiliates previously slated to receive commission for making a referral to the advertiser.

#	Date	Spyware	Advertiser	Traffic flow	Hydra ID	References
1	10/1/08	Zango	Survey Club	Zango > Hydra > Survey Club	27352	video, packet log
2	10/2/08	Outerinfo	Bidz	Outerinfo > MediaTraffic > Hydra > Bidz	17203	video, packet log
3	10/4/08	Vomba	Gevalia	Vomba > Hydra > Gevalia	15387	video, packet log
4	10/4/08	Vomba	Gevalia	Vomba > Offerweb > Hydra > Gevalia	5830	video, packet log
5	10/4/08	Vomba	Video Professor	Vomba > Hydra > Video Professor	6102	video, packet log
6	10/11/08	Zango	Gevalia	Zango > Hydra > Gevalia	11427	video, packet log
7	10/11/08	Vomba	Gevalia	Vomba > Doubleyourctr > Hydra > Gevalia	9136	video, packet log
8	10/11/08	Vomba	Reunion.com	Vomba > Artur2 > Hydra > AdShuffle > Reunion	28138	video, packet log
9	10/11/08	Targetsaver	Reunion.com	Targetsaver > Kchuentracking > Hydra > AdShuffle > Reunion	27039	video, packet log
10	10/12/08	WhenU	Omaha Steaks	WhenU > MediaTraffic > Tcshoppingdeals > Hydra > Omaha Steaks	7386	video, packet log
Effects: Targets advertiser with its own affiliate link — thereby charging the advertiser for traffic it would otherwise have received for free. See extended discussion in Auditing Spyware Advertising Fraud: Wasted Spending at VistaPrint.

These are just a fraction of the Hydra incidents my AutoTester observed during the past two weeks. But as the “Effects” entry notes, each of these incidents entails charging an advertiser for traffic the advertiser would otherwise have received for free — a strikingly poor deal for the advertiser. Moreover, each of these incidents entails a distinct Hydra affiliate ID, as shown by the ten unique values in the “Hydra ID” column.

Covering Their Tracks

It is difficult to know whether Hydra and the targeted merchants were aware that these affiliates were using spyware/adware to claim commissions on traffic merchants would otherwise have received for free. In principle it is possible that the affiliates told Hydra and the merchants what they were doing — though I find that unlikely at best. But in each instance, the packet logs reflect that these affiliates’ traffic to merchants did not affirmatively indicate that the traffic came from spyware or adware. In principle such designation could be provided by “sub=” tags on affiliate links, by HTTP Referer headers, or by other indications. But these packet logs include no such disclosure.

In incidents 9 and 10, it seems these affiliates and their spyware/adware partners took additional steps to cover their tracks. In incident 9, Targetsaver invoked the affiliate’s link to LynxtTrack and onwards to Reunion.com, without an on-screen Reunion window appearing, whether as a popup, popunder, Taskbar entry, or otherwise. See the incident 9 video — showing only a brief blip at 0:37 when Internet Explorer briefly loses then regains focus. (Notice the change in color of the Internet Explorer title bar.) With no meaningful on-screen display to report what occurred, even a sophisticated tester might fail to notice that an affiliate link had been invoked and affiliate cookies had been dropped. Incident 10 also reflects significant obfuscation: WhenU opened the affiliate’s link in a window that was initially blank (0:25-0:28). WhenU then moved the window off-screen, and even when I manually clicked the window’s Taskbar entry (video at 0:33), the window did not appear. Only by right-clicking and choosing Maximize (0:38) was I able to force the window to appear in the active screen space, letting me demonstrate and confirm that the window did indeed load the Omaha Steaks site through a Hydra affiliate link.

Taking from Other Affiliates

Not only do these affiliates charge merchants for traffic merchants should have received for free, but these affliates also take commissions that should have flowed to other affiliates. Suppose an ordinary web site affiliate (“A” for short) recommends, e.g., Gevalia. If a user clicks A’s affiliate link to Gevalia, and if a user later makes a purchase from Gevalia, then A is supposed to receive a commission on the sale. But if one of these spyware/adware-using affiliates jumps in with its own link, A gets nothing.

I first demonstrated this commission-stealing in July 2004. See my proof of Zango (then “180solutions”) claiming commissions that would otherwise be paid to other affiliates, as to traffic for Crucial, Freshpair, TGW, and Valuemags. This problem remains in full effect.

Legitimate rule-following affiliates rightly disdain spyware and adware for, among other reasons, their tendency to take commissions that would otherwise flow to legitimate affiliates. For example, my VistaPrint piece last month prompted a spirited response from Linda Buquet at the 5 Star Affiliate Programs Blog (“adware also steals from Vista Print’s HONEST AFFILIATES!”) and a discussion at affiliate forum ABestWeb.

Next Steps

In a recent MediaPost article, Hydra claimed it is “complying with the instructions [it has] been given.” Perhaps a few aggressive marketers are willing to look the other way on spyware and adware issues. But all of the advertisers listed above? All these companies are happy to pay commission on traffic they would otherwise have received for free? Pay commission for placements through spyware known to arrive on users’ computers without users’ consent? It strains credibility. By posting these examples, I intend to alert the corresponding advertisers to the nature of the traffic Hydra is sending them — letting the advertisers decide for themselves whether this is a suitable allocation of their marketing budgets. As detailed in my Wasted Spending at VistaPrint piece, my firm view remains that these placements offer advertisers no bona fide benefit, and that no fully-informed advertiser would willingly pay for such traffic.

Meanwhile, others are also observing Hydra placements through spyware and adware. In a comment at ReveNews, ShareASale CEO Brian Littleton noted that he sees Hydra affiliates using spyware and adware to cover and supersede traffic his company provides to advertisers — reducing earnings of ShareASale and ShareASale’s affiliates. Brian generously offers to provide Hydra with reports of these practices, and I encouraged Brian to post his findings on the web for all to see.

Hydra’s “AdControl” service promises “positive, proactive protection” to provide “control over where [advertisers’] ad[s] [are] placed.” Hydra says it “guards against compliance problems from every angle” to assure that ad placements are “safe[,] secure [and] profitable.” Furthermore, Hydra claims to provide “tough affiliate pre-screening and policing to assure quality.” I applaud these objectives, but it seems Hydra has more to do in order to deliver the ethical, compliant, profitable placements it has promised.

October 7, 2008December 2, 2023

CPA Advertising Fraud: Forced Clicks and Invisible Windows

At first glance, conversion-contingent advertising (cost-per-action / CPA, affiliate marketing) seems a robust way to prevent online advertising fraud. By paying partners only when a sale actually occurs, advertisers often expect to substantially eliminate fraud. After all, if commissions are only due when a user makes a purchase, what can go wrong? Unfortunately, this view is overly simplistic and, on balance, overly optimistic.

I’ve previously written at length about spyware and adware programs that watch a user’s web browsing in order to claim commission on sales that would have happened anyway. See last week’s examples of six different affiliates cheating VistaPrint through exactly this technique.

But CPA fraud does not require the use of spyware or adware on a user’s computer. To the contrary, I’ve seen plenty of CPA fraud that is entirely web based. Below I present three examples representative of this ongoing problem.

The Basic CPA Relationship

CPA advertising generally oblige an advertiser to pay a commission if three events occur:

A user browses an affiliate’s web site;
A user clicks a specially-coded link to a participant CPA merchant; and
A user makes a purchase from that merchant.

The purchase in step 3 may occur immediately, i.e. within a single browsing session. But even if the purchase occurs shortly thereafter, e.g. a day later or even a few weeks later, a merchant will typically credit this purchase to the corresponding affiliate — on the view that the affiliate at least introduced the user to the merchant. This extended credit period is typically known as the “return-days period.”

Example 1: Couponcodesmall Forces Clicks to Drop Buy.com Cookies

The Couponcodesmall Site – Cookie-Stuffing Invisibly

Some affiliates seek to bypass the user-click requirement (event 2 above) by simulating a click on an affiliate link using JavaScript. When the user merely visits the affiliate’s site, the affiliate forces the user’s browser to load an affiliate link — thereby placing affiliate cookies on the user’s PC, and claiming an affiliate commission if the user subsequently makes a purchase from the corresponding merchant.

In 2004, I presented 36 such examples in Cookie-Stuffing Targeting Major Affiliate Merchants, But the problem is ongoing.

In testing this month, I requested a page from Couponcodesmall, a top organic result for Google searches for “buy.com coupon” (without quotes). Couponcodesmall sent more than 65KB of HTML, followed by the following IFRAME:

I preserved a full packet log that shows this IFRAME in context. (Edit-Find on “IFRAME” to skip to the key section.) I also preserved a screen-capture video showing the cookies created after I requested this page — confirming the IFRAME‘s effect. As the HTML instructs, the IFRAME yields no visible on-screen indication — for the IFRAME‘s 5 pixel by 5 pixel size (blue highlighting) leaves too little space for the Buy.com site to be recognized.

Buy.com’s agreement with affiliates requires that affiliates comply with Commission Junction’s Publisher Service Agreement (PSA), and PSA rule 3.a grants credit only when a user “clicks through [a] Link[] to [an] Advertiser.” This affiliate’s IFRAME-delivered forced clicks exactly violate that requirement. If a user merely views this affiliate’s page, without clicking an ad or taking any other action, then this affiliate will receive a 3% to 5% commission on any purchase the user makes from Buy.com within the next 14 days, even though the user never clicked an affiliate link as required under the PSA.

I notified the affiliate program manager for Buy.com, and I gather that Buy.com is taking appropriate action.

Similar infractions remain easy to uncover. My automated testing systems typically uncover a dozen or more violations in a day of searching. I’ve also seen all manner of advances over the popups, popunders, and IMG tags I observed in 2004. For example, I now often observe cookie-stuffing using EMBED tags, OBJECT tags, HTML entity encoding, and doubly-encoded JavaScript.

Example 2: Allebrands Banner Ads Invisibly Load Affiliate Links

Other affiliates load affiliate links and drop affiliate cookies as users merely view a banner ad. From a rogue affiliate’s perspective, this attack is more effective than the attack in Example 1, for the affiliate need not get the user to visit the affiliate’s site. Instead, merely by viewing a banner ad on a third party web page, the affiliate can drop its cookies and obtain a commission on purchases users make from the targeted merchants within the return-days period.

That is, the affiliate bypasses both the user click requirement (event 2 above) as well as the browsing requirement (event 1 above). Removing this additional requirement lets the affiliate claim commission on more users’ browsing that much more easily.

To targeted merchants, this attack is importantly worse than the attack in Example 1. In particular, through this kind of attack, a merchant receives no promotional benefit whatsoever. Under this attack, merchants pay out commission only on sales that would have happened anyway — so every commission paid is entirely wasted.

I recently observed such an attack via a banner ad running on the Yahoo RightMedia Exchange. Merely by viewing an ad from Allebrands, a user’s computer was instructed to load three affiliate links, each in a 0x0 IFRAME. Below is the relevant portion of the HTML code (formatted for brevity and clarity):

GET /iframe3? …
…
Host: ad.yieldmanager.com
…

HTTP/1.1 200 OK
Date: Mon, 29 Sep 2008 05:36:02 GMT
…

<html><body style=”margin-left: 0%; margin-right: 0%; margin-top: 0%; margin-bottom: 0%”><script type=”text/javascript”>if (window.rm_crex_data) {rm_crex_data.push(1184615);}</script>
<iframe src=”http://allebrands.com/allebrands.jpg” width=”468″
height=”60″ scrolling=”no” border=”0″ marginwidth=”0″
style=”border:none;” frameborder=”0″></iframe></body></html>

GET /allebrands.jpg HTTP/1.1
…
Host: allebrands.com
…

HTTP/1.1 200 OK
…

The three IFRAMEs (green highlighting) load three separate affiliate links in three separate windows. Because these windows are each set to be 0 pixels wide and 0 pixels tall (blue highlighting), they are all invisible.

I preserved a full packet log of the entire HTTP sequence — showing traffic flowing from the underlying Smashits web site to Right Media to Allebrands to the target affiliate programs. (Edit-Find on “allebrands” to skip to Allebrands’ code.) I also notified the targeted merchants — McAfee, Microsoft, and Symantec. They’re taking appropriate action.

Allebrands’ Decoy Ad

Notice Allebrands’ tricky use of the misleadingly-named /allebrands.jpg URL (yellow highlighting). In particular, Allebrands instructed Right Media to send traffic to http://allebrands.com/allebrands.jpg — a .JPG extension, so seemingly an ordinary JPEG compressed image. But despite the URL’s extension, the URL actually provided ordinary HTML — creating the A HREF, IMG, and IFRAME‘s set out above. Meanwhile, if a user happened to look at this ad, the user would see only the http://allebrands.com/images/allebrands.JPG image specified by the IMG tag (pink highlighting; image shown at right). Because the IFRAMEs are invisible (blue highlighting), the IFRAMEs yield no on-screen display whatsoever.

In my testing, Allebrands distributed its rogue banner ad via a variety of web sites. One that particularly caught my eye was Smashits, a spyware-delivered banner farm which buys widespread pop-up traffic and shows voluminous ads. Beyond Smashits’ dubious traffic origins, Smashits is also notable for its placement of ads in invisible windows: Via the two-row FRAMESET presented below, Smashits creates a 0-pixel-tall “part1” frame of /audio/empty.html, which in turn ultimately displays the Allebrands ad at issue.

Reviewing the packet log in the context of my prior observations of Smashits’ spyware-originating traffic, the full sequence of relationships proceeds as follows: A variety of spyware sends traffic to Smashits (often via the MyGeek / AdOn Network / Mynaagencies run-of-network ad loader), and some users may affirmatively request the Smashits site. Smashits creates a 0-pixel-tall FRAME row in which to load ads off-screen. In that frame Smashits sends traffic to Traffic Marketplace, which redirects the traffic to Theadhost, which redirects it to RightMedia Exchange, which selects an ad from Allebrands, which stuffs cookies to claim commission from the three target affiliate programs.

Who is Allebrands? Allebrands’ web site offers no contact information, and Allebrands’ Whois is equally uninformative. But Allebrands’ DNS servers reside within creativeinnovationgroup.com, and Creativeinnovationgroup’s Whois references a Simon Brown at 700 Settlement Street in Cedar Park, Texas. Google Maps confirms that this is a bona fide address — seemingly a residential unit in a development.

Example 3: Avxf Stuffing Amazon and Hostgator Cookies through Signature IMG Tags in DealOfDay Forum

In Example 1, Couponcodesmall managed to lure a user to its own web site — in part through successful search engine optimization. In Example 2, Allebrands bought traffic from Right Media. In this Example 3, affiliate rogue Avxf manages to stuff cookies using others’ traffic — without paying for that traffic.

To get traffic, Avxf places images in the footer of a message it posts to a DealOfDay.com forum discussion. The associated HTML:

Originally Posted by <strong>somerset1106</strong> …

Ditto. I am still researching some other sites that are similar. If I find out any information I will keep ya posted. …

Avxf’s footer specified two .JPG URLs, /img16.jpg and /img17.jpg — seemingly image files based on their use of the standard .JPG file extension. But in fact these URLs redirect to affiliate programs for HostGator and Amazon:

GET /img16.jpg HTTP/1.1
…
Host: www.avxf.com

HTTP/1.1 302 Found
…
Location: http://secure.hostgator.com/cgi-bin/affiliates/clickthru.cgi?id=dsplcmnt01
…

GET /img17.jpg HTTP/1.1
…
Host: www.avxf.com

HTTP/1.1 302 Found
…
Location: http://www.amazon.com/?Fencoding=UTF8&tag=qufrho-20

Avxf Cookie-Stuffing:
The Resulting On-Screen Display

The resulting two pages then go on to drop affiliate cookies as usual. Thus, if a user makes a purchase at Amazon or Hostgator within their associated return-days periods, then Avxf gets paid a commission. The only on-screen indication of cookies being dropped is the two “broken image” icons shown at right — indications that something is missing, but in no way sufficient to inform a typical user (or even many advertising professionals) of what is occurring. Nonetheless, if a targeted user makes a purchase from Amazon within 24 hours of receiving Avxf’s forced click, or if a targeted user signs up with Hostgator within 30 days, then Avxf receives a commission.

I preserved a full packet log of the underlying HTML and redirects, showing Avxf’s images and redirects in context. (Edit-Find on “avxf” to skip to the code at issue.) I also preserved a screen-capture video confirming the destinations of the broken images.

Avxf’s practices violate applicable policies at Amazon and Hostgator. Amazon’s Associates program allows credit only if a customer “click[s] through” a special link (agreement 4¶1), whereas no click occurs in the example shown above. Furthermore, Amazon specifically prohibits atempts to “caus[e] any page of the Amazon Site to open in a customer’s browser other than as a result of hte customer clicking on a Special Link on [an affiliate’s] site” (agreement 4¶4). Similarly, the HostGator Affiliate Agreement prohibits the similar practice of forcing clicks through IFRAMEs (except “on pages or sites in which the other content represented on the site is related to HostGator” — an exception unavailable here, since the DealOfDay site is entirely unrelated to HostGator).

Who is Avxf? The Avxf web site offers adult content, but no mailing address on its Contact Us page. However, the site’s Whois offers a name and address: Kyle Hahn of Muncie, Indiana. Google Maps confirms the existence of the specified address, 480 W Skyway Drive.

Consequences – Winners and Losers

I see five basic consequences of these commission schemes:

Fraudsters win from the bogus commission they receive, despite failing to provide merchants with a bona fide marketing benefit.
Merchants pay extra commissions without getting anything in return. In particular, merchants pay commission on sales they would have made anyway. Moreover, merchants overestimate the effectiveness of their CPA marketing programs: Merchants mistakenly conclude that their CPA programs yielded sales that in fact would have happened anyway.
Legitimate affiliates lose commissions that are seized by fraudsters. Whenever an ordinary affiliate was about to receive a commission, but one of these fraudsters jumps in to claim the commission instead, the first affiliate loses a commission it had fairly earned.
Advertising intermediaries profit from the additional commissionable sales that purportedly occur. Affiliate networks typically charge merchants in proportion to the number (or dollar value) of commissionable sales. So every time a rogue affiliate claims commission improperly, the merchant must pay additional fees to the affiliate network.
Affiliate marketing staff typically benefit, directly or indirectly, from growth in the reported size of their affiliate programs. For example, an affiliate manager might earn a bonus for rapid quarter-over-quarter growth in affiliate program size.

In principle, merchants’ losses to fraud should encourage merchants to prevent such scams. But in practice, many merchants fall victim to these attacks. Why?

For one, enforcement requires fact-intensive technical investigation — examining HTML code and packet logs to uncover infractions. The required skills have little overlap with the relationship-building and communication that otherwise drive affiliate marketing.

For some merchants and networks, mixed incentives further hinder efforts to prevent these fraudulent practices. In the short run, affiliate networks and merchants’ in-house affiliate marketing staff stand to lose from rigorous enforcement — reducing their commissionable base, reducing the size of their marketing programs, and distracting their attention from activities that more directly increase their respective short-run compensation. Thus, in the short run, both groups may perceive that they can increase their profits by deemphasizing fraud prevention.

Of course, in the long run, affiliate networks have reputations to protect. Similarly, affiliate marketing staff must consider their duties to their employers; in the long run, employers may learn about these scams and think unfavorably of marketing staff who failed to take effective action to uncover improper practices.

Large Merchants at Heightened Risk

For many cookie-stuffing attacks, large merchants are at highest risk. For example, Avxf is essentially betting that the users who read DealOfDay will subsequently go on to make purchases from Amazon. As to Amazon, that’s a safe bet, for many users buy from Amazon with remarkable regularity. But if Avxf were to target a lesser-known merchant, it would face tougher odds and lower earnings.

Thus, these random cookie-stuffing attacks (as in Examples 2 and 3) tend to target large merchants. In contrast, SEO-based attacks, as in Example 1, can prey on CPA merchants of any size.

Prevention and Response

For merchants and networks seeking to uncover and prevent these practices, I see three clear ways forward:

Analyze statistics already on hand . Look for unusually high click-through rates, unusually low conversion rates, blank or unexpected HTTP Referer headers, unusual HTTP User-Agent headers, long delays between clicks and sales, and other errata. But beware of affilates who manage to manipulate these statistics.
Provide a report / complaint page. It’s surprisingly difficult for independent affiliates, users and researchers to report fraud to many online marketers. But such reports can be extremely useful — particularly when gathered by those with a special interest in catching these scams. There’s ample evidence that affiliates enjoy reporting scams: In the ParasiteWare forum at ABestWeb, affiliates and others analyze and reveal improper marketing practices; some merchants pay bounties to anyone reporting fraud by their affiliates (1, 2).
Conduct hands-on testing. Browse the web looking for such scams. Run a network monitor to detect any unexpected “click” events. Or, design appropriate software to conduct such tests automatically.

Separately, merchants and networks can sensibly deter violations through tough penalties. At present, affiliates face little downside to attempting to defraud most merchants. In Deterring Online Advertising Fraud Through Optimal Payment in Arrears, I suggest a different approach — paying affiliates more slowly so that they face greater losses if they are found to be cheating. Meanwhile, some merchants have resorted to suing fraudulent affiliates. See eBay v. Digital Point Solutions (accusing affiliates of cookie stuffing through invisible code claiming unearned commissions — like the examples above) and Lands’ End v. Remy (accusing affiliates of typosquatting on Lands’ End trademarks and redirecting to Lands’ End’s LinkShare affiliate links).

More generally, merchants ought not assume infallibilityof their online marketing schemes. Certainly CPA marketing programs avoid some of the more obvious problems of pay-per-click marketing (e.g. click fraud), but CPA campaigns remain vulnerable to other kinds of abuse. Shrewd merchants should anticipate what can go wrong, and design and audit accordingly.

September 30, 2008December 2, 2023

Auditing Spyware Advertising Fraud: Wasted Spending at VistaPrint

“VistaPrint is disciplined in operation … [VistaPrint’s] marketing [uses] highly analytically driven fact-based decision-making … [W]e manage those [marketing partners] tightly.”

– VistaPrint CEO Robert Keane in a January 2008 earnings call

For more than four years, I’ve been monitoring online advertising — alerting advertisers, ad networks, and the general public when ad spending finds its way to spyware vendors and when advertisers are getting cheated. (Examples: 1, 2, 3, 4, 5) Every day, my Automatic Spyware Tester browses the web on multiple spyware-infected PCs, watching for spyware-delivered advertising and recording its observations in videos and packet logs.

Although VistaPrint’s Robert Keane claims to effectively oversee VistaPrint’s marketing practices, I emphatically disagree. To the contrary, I’ve seen ample evidence of VistaPrint promoted by spyware and adware programs that sneak onto users’ computers without consent (including through security exploits) and through ruse and deception. In many instances, including as detailed in the examples that follow, the corresponding affiliates trick marketing analytics — claiming commission on sales that would have happened anyway, and thereby overstating the true effectiveness of their marketing efforts.

When VistaPrint is cheated by rogue marketing partners, the costs fall in the first instance to VistaPrint shareholders. Every dollar wasted on worthless advertising leaves that much less for corporate profits, and VistaPrint’s advertising budget is already strikingly large: In 2008, VistaPrint marketing consumed 31.9% of revenue (more than $125 million) while profits were just 9.9% ($39.7 million). Meanwhile, fraud against VistaPrint also harms the general public: Consumers suffer unwanted installations of spyware programs funded, in part, by theft from VistaPrint.

The following table summarizes my recent observations of fraud against VistaPrint:

Ad network	Example incident	Rogue VistaPrint incidents observed
		August – September 2008			January – July 2008
		Number of affiliates	Number of dates	Number of observations	Number of observations
Lynxtrack	Vomba, Hydra Network Affiliate 19934	6	13	18	32
Clickbooth	Vomba, Clickbooth Affiliate 14941 WhenU, MediaTraffic, Iadsdirect, Clickbooth Affiliate 7781	5	13	14	14
CPA Builder (including traffic from Revenue Gateway, from OptInRealBig / CPAEmpire, and from XY7)	Zango, Revenue Gateway Affiliate 12489, CPA Empire, CPA Builder	2	8	9	21
CX Digital Media (Incentaclick)	Vomba, Weclub, CX Digital Media Affiliate 13736	2	2	2	18
Performics (Google)	Deluxe Communications, Smartyseek, Performics	1	5	5	5
direct relationships & other networks	not yet tabulated in full – some examples on file

During August-September 2008, my AutoTester repeatedly observed VistaPrint facing rogue traffic coming from five different ad networks. In the sections that follow, this piece presents an example of fraud by an affiliate from each of the specified networks. But I’ve seen plenty more. My AutoTester has been running for more than a year — preserving tens of thousands of records of online advertising fraud, including 133 other spyware incidents arising out of traffic to VistaPrint. These many incidents confirm the breadth of improper practices by VistaPrint’s marketing partners.

Example 1: Vomba, Hydra Network Affiliate 19934 Claiming Commission on VistaPrint’s Organic/Type-In Traffic

Vomba, Hydra Network Affiliate 19334 Targeting VistaPrint

In testing on September 12, my AutoTester browsed VistaPrint’s site on a computer with Vomba (from Integrated Search Technologies, makers of Slotchbar, XXXtoolbar, WhenU, AdVantage, and more). Vomba popped open a window that sent traffic to Hydra Network (LynxTrack) (affiliate 19934), and Hydra Network in turn forwarded the traffic back to VistaPrint. The result was the screen shown at right — the original VistaPrint window at left/back, with a new popup at front/right.

Crucially, both web browser windows share a single set of cookies. Whether the user buys from the original VistaPrint window or from the popup, cookies tell VistaPrint that this Hydra Network affiliate caused the sale. So VistaPrint will pay this affiliate a commission — even though, in fact, the affiliate did nothing whatsoever to facilitate the sale. I call this tactic “self-targeting” — reflecting that Vomba covers VistaPrint with its own ad. All of the examples presented on this page entail spyware/adware performing this kind of self-targeting attack.

My AutoTester preserved a video of this incident and a packet log of the underlying network traffic.

My AutoTester observed this same affiliate using the same method on three different dates in August-September 2008. My AutoTester also observed five other Hydra Network affiliates similarly defrauding VistaPrint. All told, in August-September, my AutoTester observed 18 such incidents on 13 distinct dates.

My AutoTester’s records indicate that Hydra Network receives substantial spyware-originating traffic. Looking back to June 2007, across all my AutoTester’s browsing, my AutoTester has seen a remarkable 1,287 instances of spyware sending traffic to/through Hydra Network.

Example 2: Vomba, Clickbooth Affiliate 14941 Claiming Commission on VistaPrint’s Organic/Type-In Traffic

In testing on September 12, my AutoTester browsed VistaPrint’s site, again on a computer with Vomba. Vomba popped open a window that sent traffic to Clickbooth (affiliate 14941), and Clickbooth in turn forwarded the traffic back to VistaPrint.

Because both web browser windows share a single set of cookies, this Clickbooth affiliate gets paid a commission whether the user buys from the original VistaPrint window or from the popup. This commission gets paid even though, in fact, the affiliate did nothing whatsoever to facilitate the sale.

My AutoTester preserved a video of this incident and a packet log of the underlying network traffic.

My AutoTester observed this same affiliate using the same tactics on eight different dates in August-September 2008. My AutoTester also observed three other Clickbooth affiliates similarly defrauding VistaPrint. All told, my AutoTester observed 13 such incidents on 12 distinct dates.

My AutoTester’s records indicate that Clickbooth receives substantial spyware-originating traffic. Looking back to June 2007, across all my AutoTester’s browsing, my AutoTester has seen 917 instances of spyware sending traffic to/through Clickbooth.

Example 3: WhenU, MediaTraffic, Iadsdirect, Clickbooth Affiliate 7781 Claiming Commission on VistaPrint’s Organic/Type-In Traffic

In manual testing on September 28, I browsed VistaPrint’s on a computer with WhenU. WhenU opened a popunder that flashed briefly on screen (video at 0:15) but then forced itself to an off-screen location where I could not see it even if I minimize other windows. (See video at 0:24 to 0:30, when I attempted to find the popunder.) By manually right-clicking and choosing “maximize,” I managed to make the popunder visible — confirming that it loaded VistaPrint and noting the affiliate ID number.

Packet log analysis reveals that traffic flowed from WhenU to MediaTraffic (a pay-per-view advertising marketplace also operated by Integrated Search Technologies) to Iadsdirect to Clickbooth (affiliate 7781) to VistaPrint.

As in prior examples, both windows share a single set of cookies. Thus, the WhenU popunder causes the corresponding affiliate to receive a commission if the user makes a purchase — even though the affiliate did nothing to encourage or facilitate a purchase.

I preserved a video of this incident and a packet log of the underlying network traffic.

This advertising fraud by WhenU is particularly notable because WhenU previously claimed to have reformed all unsavory practices. (See e.g. “WhenU CEO Bill Day Cleans House.”) Moreover, WhenU previously touted a TRUSTe Trusted Download certification, and TRUSTe specifically prohibits Trusted Download programs from defrauding advertisers. (See Certification Agreement, Schedule A (“Program Requirements”), provision 14.k.) That said, WhenU has silently left the Trusted Download whitelist. Furthermore, in separate testing of WhenU software, I have recently seen repeated self-targeting fraud improperly claiming commissions from a variety of advertisers.

Example 4: Zango, Revenue Gateway Affiliate 12489, CPA Empire, CPA Builder Claiming Commission on VistaPrint’s Organic/Type-In Traffic

VistaPrint
money

viewers
CPA Builder
money

viewers
CPA Empire
money

viewers
Revenue Gateway
money

viewers
Zango

The Money Trail and Traffic Flow

In testing on September 21, my AutoTester browsed VistaPrint’s site on a computer with Zango. Zango popped open a window that sent traffic to Revenue Gateway (affiliate 12489), which redirected to CPA Empire (formerly OptInRealBig), which redirected to CPA Builder, which in turn forwarded the traffic back to VistaPrint.

The chain of intermediaries adds additional complexity to the relationships. But traffic flows in a continuous forward path: From Zango to Revenue Gateway to CPA Empire to CPA Builder and finally back to VistaPrint. Conversely, revenue flows in the opposite direction: From VistaPrint to CPA Builder to CPA Empire to Revenue Gateway to Revenue Gateway affiliate 13425 to Zango. The diagram at right summarizes the flows of traffic and money.

My AutoTester preserved a video of this incident and a packet log of the underlying network traffic.

During August-September 2008, my AutoTester also observed other incidents wherein spyware waited for a user to browse the VistaPrint site, then sent the user back to VistaPrint via CPA Builder. Beyond this Zango / Revenue Gateway / CPA Empire example, I also observed incidents wherein CPA Empire’s relationship with XY7 was the source of the tainted traffic. All told, my AutoTester has preserved more than 600 incidents of spyware sending traffic to/through CPA Empire, as well as at least 24 incidents of spyware sending traffic to/through Revenue Gateway (though I have reason to believe that some Revenue Gateway incidents were not preserved).

Example 5: 8/17/08 – Vomba, Weclub, CX Digital Media (Incentaclick) Affiliate 13736 Claiming Commission on VistaPrint’s Organic/Type-In Traffic

Vomba, Weclub, CX Digital Media Affiliate 13736 Targeting VistaPrint

In testing on August 17, my AutoTester browsed VistaPrint’s site on a computer with Vomba. Vomba popped open a window that sent traffic to Weclub, which immediately redirected to CX Digital Media (Incentaclick), which in turn forwarded the traffic back to VistaPrint.

See the screenshot at right. My AutoTester preserved a video of this incident and a packet log of the underlying network traffic.

During August-September 2008, my AutoTester also observed another CX Digital Media affiliate using spyware to claim commission on VistaPrint’s organic traffic. All told, my AutoTester has preserved more than 200 different incidents of spyware sending traffic to/through CX Digital Media.

Example 6: Deluxe Communications, Smartyseek, Performics Claiming Commission on VistaPrint’s Organic/Type-In Traffic

In testing on September 14, my AutoTester browsed VistaPrint’s site on a computer Deluxe Communications (which I have repeatedly observed installed through security exploits and otherwise without user consent). Deluxe Communication popped open a window that sent traffic to Smartyseek, which immediately redirected to Performics, then back to VistaPrint.

In typical Deluxe Communications fashion, the popup window entirely covered the window the user had been browsing. But because both windows showed VistaPrint, some users might not notice.

My AutoTester preserved a video of this incident and a packet log of the underlying network traffic.

My AutoTester observed this same affiliate using the same tactics on five different dates in August-September 2008, and my AutoTester also observed Performics traffic during VistaPrint browsing on five other (prior) occasions.

Responsibility and Causation

It’s easy to present VistaPrint as perpetrator: VistaPrint fails to adequately oversee its marketing partners. As a result, VistaPrint’s advertising spending helps fund spyware and adware programs that sneak onto users’ PCs, with serious harms to performance, reliability, and privacy.

But I also see an important sense in which VistaPrint is a victim: VistaPrint’s marketing partners are defrauding VistaPrint by claiming commissions on sales they actually did nothing to cause. Such commissions are entirely wasted, yielding no bona fide marketing benefit to VistaPrint.

By all indications, VistaPrint faces significant difficulties in supervising its marketing partners. Yet other major retailers handle such challenges with greater success. For example, it is comparatively rare to see spyware or adware promoting, defrauding, or attempting to defraud Amazon — even though Amazon spends nearly three times as much on marketing as VistaPrint ($344 million to $125 million).

What could VistaPrint do differently? For one, I question VistaPrint’s choice of marketing partners: As the preceding statistics indicate, I have repeatedly and widely seen spyware and adware sending traffic to many of the partners VistaPrint works with. VistaPrint might face less fraud if it favored marketing partners with a track record of successful supervision of their affiliates.

More generally, an affiliate currently faces little real downside to attempting to defraud VistaPrint. If an affiliate gets caught cheating, VistaPrint will terminate that affiliate, but I see little indication that VistaPrint exacts any meaningful penalty to make the affiliate (or the network providing that affiliate) regret its transgression. In Deterring Online Advertising Fraud Through Optimal Payment in Arrears, I suggest a different approach — paying affiliates more slowly so that they face greater losses if they are found to be cheating. Alternatively, VistaPrint might sue affiliates it learns are cheaters, as in eBay v. Digital Point Solutions and Lands’ End v. Remy.

Yet Keane’s remarks (“highly analytically driven fact-based decision-making”) reveal that VistaPrint is at least attempting to supervise its marketing partners to optimize its spending. How, then, could VistaPrint end up facing so much fraud? I suspect VistaPrint’s analytics actually lead the company astray. Consider the tactics presented above, from the perspective of the information easily available to VistaPrint’s marketing staff. Because these affiliates target users who are already interested in VistaPrint, the affiliates’ conversion rates are likely to be well above average. Moreover, because these affiliates incur limited costs, they can accept payments far below what Google might require. Thus, VistaPrint’s staff are likely to assess these affiliates favorably — without realizing that the traffic at issue is traffic VistaPrint would otherwise have gotten for free. Put differently: Although VistaPrint’s measurements may be very precise, they’re inaccurate because VistaPrint misunderstands the sources of affiliates’ traffic.

In attempting to prevent such fraud, VistaPrint should also examine its ad networks’ incentives. Ad networks often mark up affiliates’ fees: For every dollar VistaPrint is slated to pay to a given affiliate, that affiliate’s network takes another (say) $0.20. As a result, ad networks have a clear incentive to tolerate rogue affiliates: Networks make money from each sale credited to an affiliate, so ejecting rogue affiliates would directly reduce the network’s earnings.

The Big Picture

Spyware-based advertising fraud extends far beyond VistaPrint. Most merchants operating affiliate, CPA, or other conversion-contingent programs face similar fraud. But VistaPrint is a large and, purportedly, sophisticated advertiser. So VistaPrint could appropriately lead by example.

I’m overdue to present further examples of spyware and adware continuing to defraud major merchants. Historically my articles have tended to emphasize the largest US affiliate networks — Commission Junction, LinkShare, Performics. But there’s plenty of fraud through smaller networks too, as well as through networks based outside the US. I’ll present additional examples later this fall.

In January, an Anti-Spyware Coalition workshop asked “Is adware dead?” Some panelists responded substantially in the affirmative. But my AutoTester indicates otherwise. I’m pleased to see that big advertisers no longer advertise directly with major adware vendors. Yet a chain of indirection — adware sending traffic to one ad network, which forwards to another, then finally to an advertiser — continues to promote top brands. Furthermore, spyware-delivered banner farms and ad-loaders are becoming increasingly widespread. This month I saw adware still promoting American Express, Apple, and AT&T — to name just a few of the A’s. There’s plenty of work left to be done.

September 1, 2008December 2, 2023

Typosquatting: Unintended Adventures in Browsing

Edelman, Benjamin. “Typosquatting: Unintended Adventures in Browsing.” Cybercrime Gets Personal, McAfee Security Journal (fall 2008): 34-37.

Typosquatting is the practice of registering domain names, identical to or confusingly similar to trademarks and famous names, in hopes that users will accidentally request these sites–whereupon they will receive, typically, advertisements. This piece presents the basic typosquatting business model, based on my analysis of more than 80,000 typosquatting domain names. I analyze the advertising intermediaries that make typosquatting profitable, and I assess the legislation and litigation that are beginning to put a check on this practice.

June 11, 2008December 2, 2023

Senate Testimony on Counter Spy Act (S.1625)

I submitted written and oral testimony to the US Senate Committee on Commerce, Science, and Transportation as to the Counter Spy Act (S.1625), in the hearing entitled Hearing on Impact and Policy Implications of Spyware on Consumers and Businesses.

My written testimony:

Testimony of Benjamin as to Counter Spy Act – June 11, 2008

Hearing web page and video recording.

May 28, 2008December 2, 2023

Debunking Zango’s "Content Economy" updated May 29, 2008

Zango often touts its so-called “content economy” — purportedly providing users access to media in exchange for accepting Zango’s popup ads. After four years of debunking Zango’s claims, I’ve come to suspect the worst — and my investigations of Zango’s media offerings confirm that Zango’s media library is nothing to celebrate. This article reports the results of my recent examinations. I show:

Widespread copyrighted video content presented without any indication of license from the corresponding rights-holders. Details.
Widespread sexually-explicit material, including prominent explicit material nowhere labeled as such. Details.
An audio library consisting solely of prank phone calls to celebrities (without the “music” Zango promises). Details.
Widespread material users can get elsewhere for free, without any popups or other detriments. Details.
Widespread material that content creators never asked to have included in any Zango library. Details.

Widespread copyrighted video content presented without any indication of license from the corresponding rights-holders

Many of the videos in of Zango’s video library are the work of major movie studios, TV networks, and other third parties that own and assert copyright in their respective works. These videos consistently appear without any statement of authorization (e.g. “used with permission”) or even the ordinary copyright notice. I therefore conclude that Zango’s site features these videos without authorization from the corresponding rights-holders.

Zango Offers Daily Show w/ Chris Rock

Zango Offers Borat

For many videos in Zango’s library, it is trivially easy to determine the video’s source. For example, text in the corner of Zango’s “Ashley Judd Nude Photoshoot” indicates the video comes from “Norma Jean & Marilyn” (1996, released on DVD by HBO Home Video). The title of Zango’s “Wild Things” suggests the video comes from the 2004 Sony Pictures movie by the same name; watching the video confirms the match. Zango’s “Girls Next Door Nude Compilation” begins with the distinctive Playboy logo. Zango’s “Chris Rock on the Daily Show” reproduces a video clip from Comedy Central’s Daily Show. It’s easy to find scores of other examples plainly labeled as well-known copyrighted works.

Other videos in Zango’s library are harder to identify — at least those without extensive entertainment industry experience. For example, I cannot easily determine the specific movie that included the scenes shown in Zango’s “Paris Hilton Striptease” or “Rachel Hunter in the Bathtub.” But the clips leave little doubt that they were filmed professionally and that the respective studios hold copyright in the resulting works. Similarly, I cannot easily determine the specific source of Zango’s “Branding Beat Down.” However, every frame of the video bears the distinctive Fox logo — indicating that the video originated with the Fox Broadcasting Company.

As to at least eight of the files in Zango’s library, I have specifically confirmed that Zango’s reproduction occurs without authorization from the underlying rights-holders. (Details below.) As to selected other files, I have sent inquiries to the corresponding rights-holders. I will update this page if I confirm whether Zango has properly licensed the content at issue.

Infringing videos are remarkably prominent in Zango’s video library. For example, as of May 27, Zango’s home page linked to “Borats First Trip To An American Gym” (s.i.c.). This clip was listed as the second most popular video in Zango’s entire content library, and it was placed in the top-center of Zango’s main www.zango.com web page, “above the fold” (within the portion of the page visible without using scroll bars). Yet the title of the video plainly indicates that the video contains the copyrighted work of others. Moreover, the video features the “DIVX Video” logo, indicating that DivX software was used to extract (“rip”) the video from a DVD. No authorized reproduction would be provided with a DivX overlay, so the presence of the DivX marker confirms that this video was reproduced without permission from the creators of Borat.

Other online video sites have been the target of major copyright litigation. For example, Viacom last year sued Google, alleging that “YouTube appropriates the value of creative content on a massive scale for YouTube’s benefit without payment or license.” In defense, Google points out that YouTube receives videos from independent — potentially granting Google immunity for these infringements due to the Digital Millennium Copyright Act‘s safe harbor for infringements occurring at the direction of users (17 USC 512(c)(1)).

Unlike YouTube, Zango’s video library offers no prominent “upload” function. Some of Zango’s videos arrive through the Revver video-sharing service (discussed below), probably originating with a variety of independent users. But many of the copyrighted videos Zango offers reside on Zango’s servers, not on Revver servers. (For example, all eight of the sexually-explicit videos linked in the first paragraph of the next section are hosted on Zango servers.) Because Zango offers no “upload” function by which ordinary users could have put videos onto Zango’s site, it therefore appears that these videos were provided by Zango or its agents, not by independent users. If so, Zango will not find protection in the DMCA’s safe harbor for infringements caused by users.

Moreover, even if Zango’s videos were provided by independent users, the circumstances of the reproduction seem to render Zango ineligible for the DMCA safe harbor. For one, the safe harbor requires that Zango lack actual knowledge of the infringements. But the infringing videos were obvious and self-evident, not just from their titles and contents, but also from their prevalence in featured results Zango chose to highlight. In addition, the safe harbor requires that Zango not receive a financial benefit directly attributable to the infringements. But Zango used these videos to induce users to download its popup-generating software, a financial benefit that is directly attributable to the infringing videos. (Consider the case of a user who installs Zango in response to solicitation offering a specific copyrighted video clip. Example.) Furthermore, Zango has the right and ability to control the infringement (e.g. by removing the infringing videos). Because Zango’s financial benefit can be directly tracked to a specific infringement, and because Zango has the right and ability to prevent such infringement, Zango seems to fail the test in 17 USC 512(c)(1)(B).

Zango may claim that its videos are fair use. The Copyright Act sets out a four-factor test for determining whether reproduction of a copyrighted work is permissible, despite lack of authorization from the rights-holder. The fair use test calls for considering 1) the purpose and character of the use (e.g. whether commercial or nonprofit), 2) the nature of the copyrighted work, 3) the amount and substantiality of the portion used, and 4) the effect of the use upon the potential market for the work. Factor one is easy: Zango’s use is clearly commercial, which tends to cut against a finding of fair use. Zango might claim that its presentation of excerpts (rather than entire movies) supports a finding of fair use under the third test — but Zango exactly chooses what it views as highlights (e.g. the explicit portions of full-length movies), yielding clips with a greater than usual effect on the potential market for the underlying works. In short, a fair use defense is at best uncertain.

Wide-scale copyright infringement could expose Zango to substantial liability. The Copyright Act provides for statutory damages of “not less than $750” per violation. My examination indicates Zango is reproducing (at least) hundreds of copyrighted videos without any statement of authorization. Furthermore, such videos have surely been downloaded repeatedly — giving rise to potential statutory damages that could easily reach seven digits or more.

Widespread sexually-explicit material, including prominent explicit material nowhere labeled as such

Celebrity Videos Featured by Zango

Prominent Video – Explicit but Unlabeled

Browse Zango’s video library, and it’s easy to find sexually-explicit video. As shown in the first inset image at right, the bottom-right corner of each Zango “Browse” page gives a list of celebrities — each of them female, each featured in various states of undress. Among other explicit videos of these celebrities, Zango offers “Britney Spears See Thru“, “Britney Spears Black Dress Upskirt“, “Paris Hilton Striptease“, “Rachel Hunter in the Bathtub“, “Jessica Alba’s Chest and You“, “Jessica Simpson Nipple Slip“, “Anna Kournikova Panties Oops“, and “Angelina Jolie Sex Scene.”

The titles and descriptions of many of Zango’s videos suggest that their subjects were unwilling participants. See e.g. “nipple slip” and “upskirt” above, as well as additional videos like Zango’s “Arab wife’s sexy dance secretly taped” and Zango’s “Girlfriend Finds Hidden Camera.”

Through its placement and labeling of sexually-explicit videos, Zango creates a substantial risk that users will receive explicit materials they did not seek. For example, on May 24, I clicked “Browse” to flip through Zango’s content library. Using Zango’s default sort, the third video was entitled “the pool” with comment “havin fun in the pool” (s.i.c.). (Screenshot of the link from within Zango’s video library.) This title and comment give no indication that the resulting material is explicit. But clicking the “Watch” button immediately yields a large video showing two male adults swimming nude, then exiting the pool (entirely disrobed). As best I can tell, Zango did nothing to alert users to this explicit material, nor does Zango prevent (or even discourage) children from viewing such material.

Zango’s May 24 “the pool” video was not a mere anomaly. The same video remained linked in the same way in my tests on May 25 and 26, and on portions of May 27.

In litigation documents, Zango last week claimed that it never distributes explicit material to those do not want it. In particular, Zango argues: “Zango never sends unwanted links to pornography web sites” and “Zango only directs adult-oriented advertisements to a user after that user, by his own behavior, has demonstrated interest in such content.” I disagree. The preceding paragraphs offer a counterexample — Zango prominently providing a link to sexually-explicit materials, and provideing that links to users who never demonstrated interest in any such content. Zango may claim that these links tout videos — not a “web site” as in the first quoted sentence. Alternatively, Zango may claim that the links are not “advertisements” — hence beyond a strict reading of the second quoted sentence. But the underlying contradiction remains: Zango says it doesn’t provide pornography except when users seek it; yet in fact Zango does sometimes deliver explicit materials unrequested.

That Zango funds and distributes sexually-explicit materials is well-known. See e.g. the Sunbelt Blog’s February 2008 conclusion that “80% of [Zango’s] business comes from Seekmo, the porn side of its business.” See also Sunbelt’s off-hand November 2006 remark that “hardcore porno videos [are] funded through Zango Seekmo installs.”

But the scope of explicit materials within Zango’s video library is quite striking. Consider the first page of Zango’s library listings for Angeline Jolie. Beyond the “sex scene” video linked above, the listings also include “Angelina Jolie Taking a Bath”, “Angelina Jolie Under the Sheets”, “Angelina Jolie in Bra & Panties”, “A fairly long nude scene staring Angelina Jolie” (s.i.c.), “Angeline Jolie Getting It On”, “Angelina Jolie Nip Slip”, “Angelina Jolie Hardcore”, and “Angelina Jolie Dominatrix”, and “Angelina Jolie Hot On The Runway.” That’s ten explicit results out of twenty links — suggesting that explicit materials are remarkably widespread on Zango’s site.

The initial version of this article also flagged Zango’s “Nice But” (s.i.c.), a video that on May 27 occupied the fourth-most prominent position in Zango’s “Browse” listings. The thumbnail image of this video appeared to feature a full-screen display of a man’s naked buttocks, filling the entire screen. In a follow-up, Zango points out that in fact, the video shows an extreme close-up zoom of of two hands. So this image and video are not actually explicit. Yet a viewer merely flipping through Zango’s listings would nonetheless see an image that is, by all indications, explicit. The title “but” (s.i.c.) and the keyword “naked,” both adjacent to the thumbnail, reinforce the user’s perception of having seen an unrequested explicit image. Although the image is not actually explicit, the image’s content, placement, and labeling make it likely to leave users with the same feeling as an unrequested image that is actually sexually explicit: In both instances, a viewer who merely sees the image and does not watch the video will think he has seen an unwanted explicit image. In my view, Zango errs in mocking this harm. To the users who Zango tricks, the harm is perfectly real.

Zango’s audio library consists solely of prank phone calls to celebrities

Zango Offers Prank Phone Call Recordings

Zango’s content library offers three types of media: Videos, screensavers, and audio. Despite Zango’s much-touted “content economy,” Zango offers just eight audio clips. And although Zango’s “About Zango” description promises to provide free access to “music,” in fact all eight of these audio files are recordings from talk radio — just voices, with no music at all.

All eight of Zango’s audio recordings share a common theme: Prank phone calls to celebrities. In each, a caller pretends to be someone famous (e.g. the Prime Minister of Canada), and calls a celebrity (e.g. Bill Gates) under the guise of a bona fide discussion. The caller proceeds to berate the celebrity (e.g. by criticizing the features and reliability of Windows).

A comment in several of the videos reveals the source of the recordings: The Masked Avengers, which Wikipedia describes as “a Canadian radio duo … of disk jockeys and comedians Sebastien Trudel and Marc-Antoine Audette, known for making prank calls to famous persons by pretending to be government officials or officers in charitable organizations.” I wrote to Mr. Trudel, who confirmed to me that he has not granted Zango any license to use or reproduce these clips.

After placing these recordings in its content library, Zango further syndicates the materials onto Zango’s partner sites. For example, celebsprankd.com (screenshot) features all eight recordings, but requires users to install Zango before listening. Whois reports that Celebsprankd comes from the Vancouver, B.C. advertising firm Neverblue Media — a conclusion confirmed by the presence of the Neverblue.com web server at the same IP address. Neverblue describes itself as a “leading … online marketing company” offering “premier” advertising and “solid business leads” — claims arguably inconsistent with distributing and profiting from prank phone calls, not to mention distributing Zango. (But these recordings aren’t Neverblue’s only tie to Zango. This month alone, my Automatic Spyware Tester found eleven incidents of Neverblue affiliates buying popup traffic from Zango. I’ve also found dozens more incidents as to Neverblue affiliates buying traffic from other spyware.)

What of Zango’s distribution of these prank call recordings? With so few clips yet such prominent placement (including five of these eight audio recordings featured on Zango’s home page), senior Zango staff surely know what the files contain. Does Zango support prank phone calls? Wasting celebrities’ time under false pretenses? Recording phone calls without permission, even in states that specifically require such permission? It’s hard to reconcile these practices with Zango’s supposed reforms.

Widespread material users can get elsewhere for free, without any popups or other detriments

Much of Zango’s content is available elsewhere without charge and without installing any software that tracks online behavior or shows popup ads. For example, clicking Zango’s “Browse” tab and retaining defaults, every single video on the first page of results is syndicated from Revver. Users could just as easily get these videos directly from Revver, as receive them from Zango. But if users watched these videos at Revver, Zango’s software would not track their web browsing and searching, and users would not receive Zango’s popup ads.

Zango Falsely Tells Its Users:
“Uninstallation … eliminates content access”

Furthermore, Zango makes untrue claims about the necessity of its software. For example, Zango claims that “uninstallation … eliminates content access.” It does not. For files hosted at Revver, installation of Zango is not necessary to watch the videos in the first place, and uninstallation does not interfere with watching the videos later. Moreover, even many Zango-hosted files can be accessed without installing Zango, or after uninstalling Zango. For example, Zango’s “Chris Rock on the Daily Show” is actually just a standard Windows Media Video (WMV) distributed from the following URL: preview.licenseacquisition.org/123/1054944882.36393/yikers_chris_rock_on_the_daily_show.wmv . Zango’s “Borats First Trip To An American Gym” (s.i.c.) is preview.licenseacquisition.org/123/1054944854.02531/yikers_borats_first_trip_to_an_american_gym.wmv . Similarly, Zango’s “Bill Gates Gets Pranked” is a WMA hosted at preview.licenseacquisition.org/13/12295/12295.wma . Any user who knows these URLs can easily receive the corresponding files — without ever installing Zango, or after uninstalling Zango. Zango ought not claim otherwise.

Presenting material that content creators never asked to have included in any Zango library

By syndicating videos from Revver, Zango causes its video library to feature materials that content creators never asked to have associated with Zango in any way.

Zango’s syndication of Revver videos has prompted numerous complaints content creators who post videos to Revver. For example, Chris Pirillo asked why his videos are appearing on Zango. (“I don’t remember giving Zango permission to push crapware on my behalf.”) Revver forum user JPPI pointed out the irony of Zango claiming his videos were “FREE, thanks to Zango” when in fact the videos were free all along (even before Zango syndicated them). Revver forum user David complained that it is “kinda deceptive” (s.i.c.) “to make it sound like Zango was the one who made the video free.”

In response, Revver Vice President Asi Behar agreed to ask Zango to remove any Revver videos that Revver authors specifically so designate. But such removals do nothing to cure the deception of Zango requiring that users install its software before watching materials widely available elsewhere for free. Furthermore, such removals do nothing to protect Revver content creators who are unaware of Revver’s relationship with Zango. The word “Zango” appears nowhere on Revver’s official web site (as distinguished from Revver’s forums and some Revver-hosted videos). Thus, a Revver content creator has no easy way to learn about Revver’s relationship with Zango — not to mention learn of the option to request exclusion from Zango.

Zango’s syndication of Revver videos risks tainting the good name of Revver content creators. Consider a user who searches for a Revver video and finds that video hosted at Zango (just as Chris Pirillo did last year). The user may mistakenly conclude that installing Zango is in fact necessary to watch the video. If so, the user is likely to end up with a negative view of the underlying content creator — mistakenly concluding that, e.g., Chris Pirillo has partnered with Zango or endorses Zango’s activities. Revver forum complaints indicate that numerous Revver users share this concern. Yet Revver continues to syndicate videos to Zango without first checking with content creators.

Zango’s problems in context

Last week, Zango was one of four finalists for the Software & Information Industry Association’s CODiE Best Video Content Aggregation Service. In my view, that award is misguided: Far from deserving praise, Zango should be criticized and shunned for reproducing others’ copyrighted work without any apparent license to do so, showing sexually-explicit material unrequested, and offering users a lousy value by bundling extra ads with content users could get elsewhere for free.

Meanwhile, Zango continues litigation with Kaspersky. Recall: Kaspersky blocked Zango’s software from installing; Zango sued; Kaspersky successfully defended on the grounds that the Communications Decency Act, 47 USC 230, immunizes Kaspersky’s behavior because Kaspersky is an “interactive computer service provider” blocking material that, in its subjective opinion, is “objectionable.” In Zango’s appeal, Zango claims its software is not “otherwise objectionable” (brief pages 12-15; PDF pages 17-20). If it’s not objectionable to show explicit material unrequested — not to mention to infringe copyrights on a massive scale, and to insert extra ads around material available elsewhere without such ads – then I don’t know what is.

Finally, I’m often asked whether Zango continues the behaviors I previously reported. Installing through sneaky fake-user-interface pop-up ads that mimic the appearance of official Windows dialog boxes (as I reported last summer)? Yes. I made a fresh video showing such installations just last week.Defrauding advertisers through popups that cover merchants’ sites with their own affiliate offers(as I reported last spring, in September 2005, in summer 2004, and otherwise)? Definitely. This month alone, I reported six Zango incidents to just one of my advertiser clients — not to mention scores of other incidents targeting other web sites and advertisers. Zango repeatedly claims its problems are all in the past, but my hands-on testing continues to indicate otherwise.