• FTC Closes Lid on Pop-Up Ad Charges
  • September 8, 2004
  • Law Firm: Reed Smith LLP - Pittsburgh Office
  • Without imposing any financial penalty, the Federal Trade Commission has settled a case involving allegations that a company and its principals illegally bombarded online consumers with pop-up advertisements.

    The FCC accused the principals of San Diego-based D Squared Solutions LLC of employing the Microsoft Windows Messenger Service to send consumers pop-up notices advertising their company's pop-up ad-blocking software. The notices, which appeared as frequently as every 10 minutes as long as viewers were connected to the Internet, caused consumers to lose data and work productivity, applications to freeze, and computers to crash, the FCC stated in a release.

    In addition to sending pop-up ads offering software to stop the very type of ads they were sending, the defendants also sold or licensed their pop-up-sending software to other parties, enabling others to send millions of additional pop-up ads, the FTC alleged. The defendants' actions violated federal consumer protection law, the agency claimed.

    The settlement agreement bars the defendants from sending Windows Messenger Service pop-up ads, selling Windows Messenger Service pop-up blocking software, and selling Windows Messenger Service pop-up sending software. It prohibits instant message advertising and requires an opt-out mechanism for other kinds of Internet advertising. The agreement also bars the defendants from using deceptive return addresses in email and other ads. D Squared principals Anish Dhingra and Jeffrey Davis admitted no wrongdoing in the settlement.

    Why This Matters: Although D Squared suffered no financial penalty, the FTC barred the advertising model the company was alleged to have used. The case, which was widely covered by the media, reflects a growing public impatience for pop-up advertising and the willingness of federal authorities to intervene.