A preliminary settlement has been approved in a class-action case against ad network ValueClick and its subsidiaries Commission Junction and Be Free. The case, which originated as two separate cases brought on behalf of the publishers and advertisers that worked with ValueClick, focused on the presence of adware within the Commission Junction/Be Free network and the company's inaction when it came to holding publishers to a code of conduct. As part of the settlement, ValueClick doesn't admit to any of the allegations, but it has agreed to pay $1 million into a settlement fund that will be used to compensate class members.
The two cases (which were eventually merged) began in April of 2007 and contended that ValueClick did little-to-no monitoring of its own network to ensure that advertisers adhered to the code of conduct. This was meant to protect both the users and other advertisers so that adware producers would not use the network for nefarious purposes, piggybacking on the ads of legitimate partners to trick users into buying things from other, less-legitimate vendors.
Unfortunately, adware creators essentially "hijacked" commissions from other advertisers and publishers on ValueClick's network, the lawsuit alleged. Once that happened, ValueClick and gang failed to disclose the existence of this commission theft to its legit partners, resulting in what the plaintiffs believe were relatively significant losses.
Unsurprisingly, ValueClick denied the allegations and argued that it had no legal duty to the plaintiffs to monitor for noncompliant software or to restore any lost commissions due to adware. The company also said that its monitoring systems already satisfied its legal obligations to advertising and publishing partners, and that no further action was necessary.
Since then, ValueClick seems to have changed its tune a little bit, although it still doesn't admit to any fault. In order to avoid future litigation, the company and its affiliates have not only agreed to pay into the $1 million settlement fund, but also to an independent audit of the network's practices regarding the handling of adware.
It also agreed to begin tracking more data and to make improvements to its Network Quality procedures. Partners that are under investigation for hijacking clicks using adware will have their click data automatically preserved for further investigation.
This isn't the first time ValueClick has been in the news for questionable business practices. In March of this year, ValueClick and subsidiary Hi-Speed Media were slapped with $2.9 million in civil penalties by the Federal Trade Commission for violations of the CAN-SPAM Act of 2003, hardly the sort of thing that screams "legitimate business!"
The company used e-mails and online banners to promote free gifts like iPods, gift cards, PS3s, laptops, and plasma TVs. But when unsuspecting users clicked through, they were greeted with a number of third-party offers to sign up for before receiving their "free" gifts. It was ValueClick's failure to disclose that users must first sign up for other offers (ones that cost them money) before collecting the "free" prize that violated both the CAN-SPAM Act and the FTC Act.
This, in addition to failing to secure customers' financial information, landed ValueClick and its subsidiary in hot water, forcing it to pay up to the FTC and agree to a "comprehensive security program" through 2028.
Further reading:If you have PACER access to federal court cases, look for case numbers 2:07-cv-02638-FMC-CT and 2:07-cv-02641-FMC-CTSettlement website: CJSettlement.com