Though Intermix claims to have settled the matter for $7.5 million, any disposition leaves open a number of issues regarding Spitzer's ultimate plan for a possible sweep against the entire adware industry.
In particular, Spitzer has repeatedly threatened advertisers who run ads with adware vendors. These threats have created a conundrum for advertisers. On one hand, adware offers advertisers a cost-effective way to reach consumers who derive value from the advertisements. On the other hand, no advertiser wants to get on Spitzer's hit list. Thus, if Spitzer's threat is real, many advertisers will simply forgo adware advertising.
But amid the commotion, a critical, substantive question remains ignored: What legal doctrine holds advertisers liable for advertising via adware? We have yet to hear a coherent theory from Spitzer--or anyone else--explaining how this liability arises.
In fact, advertiser liability for adware vendors' actions would represent a novel and unprecedented application of current law. In other words, to hold advertisers liable, Spitzer will need to create new law.
We can better understand the radical nature of these assertions through some analogies to other advertising contexts. Imagine The New York Times runs a libelous story or illegally obtains consumer subscriptions through deceptive trade practices. Or imagine a Yellow Pages vendor illegally trespasses by throwing copies of its book onto homeowners' land.
Are advertisers liable in these circumstances? Generally, the answer is emphatically no. Advertisers have no more responsibility for the media partner's actions than any other customer or vendor. Indeed, such expansive liability might generate First Amendment concerns.
An exception is if an advertiser has sufficient knowledge of, and control over, the media partner's bad practices, which could create liability under venerable agency or conspiracy doctrines. However, the requisite level of knowledge and control is high--far higher than most advertisers ever have.
Indeed, many advertisers use intermediate vendors (such as ad agencies or affiliate marketers) to manage ad placement, meaning that the advertisers themselves are often fairly removed from the media partner's behavior.
In response, Spitzer's office has intimated that advertisers should know that their ad dollars are finding their way to adware vendors, and further should know that adware vendors are acting illegally.
This logic is extremely unpersuasive. In fact, many adware vendors fully or substantially comply with existing law, so advertisers should hardly assume the worst. Further, even if advertisers know who might get their ad dollars, this is a far cry from the knowledge and control necessary to hold the advertiser liable for someone else's actions.
In the spam context, Congress statutorily created a new type of advertiser liability in the 2003 Can-Spam law. Congress or state legislatures could choose to adopt a similar law for adware advertisers.
Until then, adware advertiser liability remains purely speculative. Nevertheless, the specter appears to serve Spitzer's apparent modus operandi of attempting to starve the few truly illegal actors by cutting off their access to customers. Unfortunately, these threats veer disconcertingly close to vigilantism. Using hypothetical law to spook an industry goes far beyond a prosecutor's role of enforcing existing law and verges into the realm normally reserved for our elected legislators.
Meanwhile, there is a collateral cost to this vigilantism. Legitimate advertisers may choose not to use legitimate adware vendors to deliver socially beneficial advertising to consumers. We would not tolerate scare-mongering in other media, like newspapers, radio or television, and we should not tolerate it in the adware context either.
Spitzer's threats against the entire adware industry may garner popular support for him for leading the charge against "spyware," but the threats are based on unprecedented legal theories with broad negative policy implications. We should not allow our current antipathy toward adware to blind us to the radical nature of holding customers liable for what their vendors do.
Biography
Eric Goldman is an assistant professor at Marquette University Law School in Milwaukee. He has taught cyberlaw for a decade and has written and spoken about adware and spyware issues extensively. He has legal and consulting relationships with some adware vendors.
See more CNET content tagged:
adware company, advertiser, liability, adware, Intermix Media Inc.
I haven't followed details of this, but, suppose Spitzer announces that he'll "be collecting the names/companies that are advertised in adware between November and February". This gives company boardrooms notice that they SHOULD know how their advertising IS being spent. Then Spitzer should go after the top X advertisers. With data that "this advertiser appeared x% of the time" It would be hard for a company to say "Hey, I didn't know my $ were supporting Adware".
Or, Perhaps a simple "Your product/service has been appearing in adware" Warning letter should be sent first. Then if it doesn't stop, then "go after them".
With some real warning and a time frame, perhaps companies will pay attention? (and scare off enough so the adware 'company' dies...?)
At least, maybe they will...
my own computer is supposed to be my own computer!
Missing from the article and the discussion so far
is Spitzer's choice to prosecute spyware tactics
as violations of the Common Law.
This is not only legitimate, legally,
but refreshing.
Too bad it's such a rare perspective.
The Constitution of the United States
is a common law document.
One of its provisions in the Bill of Rights
says that the right of the people to be Secure
in their personal effects
shall not be violated.
Exceptions can occur, but must be based on
detected criminal suspicions,
and require a warrant signed by a judge.
None of these legal niceities
are respected by the spyware.
Elliot Spitzer is not making up new laws on the spot;
rather he is re-affirming
the fundamental Law of the Land.
It's about time!
I wish him success in his courageous action.
lawyers and not enough intelligent, rational, moral people. It is
clearly a violation of my property and my rights to install
software on MY computer without my permission. It is electronic
trespassing, plain and simple. Laws should be passed which
reflect this practical reality.
If a company wants to advertise its products, and hires a
spyware company to do their advertising... they should get ONE
warning. After that, prosecute them out of business. They have
forfeited their right to do business by violating the public trust.
Free market doesn't mean "forget people's rights in the face of
the rights of corporations" ... it means a fair playing ground for
all to participate. Violating my rights doesn't constitute "assuring
a fair playing ground" it is simply violating my rights.
Enough of this legal hair-splitting. It should NOT be "legal" to
violate others fundamental rights. Any elected officials who think
it ought to be (or have been paid off by corporations to forward
that notion) had better look out because this government is "of
the people and by the people" and their term in office will be
coming to an abrupt halt.
- Spitzer
- by September 5, 2005 1:51 PM PDT
- Spitzer has said that he is going after any and all illegal adware companies, and going to make sure that the industry lives up to its promises of drastic change. I for one look forward to seeing the industry change.
- Reply to this comment
-
(5 Comments)Here is an interesting article about this:
http://www.nmreport.com/archives/2005/09/judge_rules_aga.php
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Editorial Note:
Pesach Lattin is a leading online advertising investors, commentator and journalist. MarketingSherpa recently named him one of the top journalists for media buyers.