Software company to pay $97K, restitution for misleading customers
OLYMPIA…Attorney General Bob Ferguson’s High-Tech Unit has secured a $97,000 settlement with ZookaWare, an Arizona-based software company, and its owner for engaging in unfair and deceptive practices against consumers over the last several years.
“It’s the Attorney General’s job to root out unfair and deceptive behavior in the marketplace and to hold companies accountable,” said Attorney General Bob Ferguson. “Our nationally-recognized High-Tech Unit protects customers from online scams and encourages fairness in the marketplace.”
ZookaWare sells three products:
- SpyZooka is computer maintenance software that scans for and removes spyware.
- RegZooka detects and repairs “registry errors.”
- CyberBackup is an on-line “cloud” back-up service.
According to the Attorney General’s Office, SpyZooka would detect standard tracking cookies and label them as “Spy Cookies” or “infections”—misleading consumers into believing they are more dangerous than they really are. Similarly, RegZooka detected harmless errors like empty registry keys and labeled them as issues needing correction. Customers then had to purchase the products to fix these “problems.”
The AG's Office also alleged the companies employed deceptive practices on their purchase pages, including:
- Filling customers’ “shopping carts” with multiple products when customers were trying to purchase just one product;
- Including “free” trials with only a fine-print disclosure detailing the monthly charge of $9.95 after the first month;
- Providing minimal and ineffective disclosure that the products included an automatic annual renewal; and
- Making it difficult to cancel.
Finally, the companies allegedly engaged in “astroturfing”— or posting fake positive reviews on social media, blogs or Web-based news stories posing as satisfied customers.
“Fake reviews and false free trials are highly deceptive practices that trick customers into paying for products they might otherwise have avoided,” Ferguson said. “Moreover, no business should trap consumers in auto-renewals with no easy way to escape.”
The Attorney General’s Office alleges ZookaWare used the same types of scare tactics employed by Ascentive and e-Next Media – two companies that the High-Tech Unit settled cases with in 2011. During a recent industry sweep to identify and eradicate similar activity in the marketplace, the High Tech Unit discovered a company called Blue Penguin Software, based in Sequim. Shortly thereafter, Blue Penguin sold all of its assets to ZookaWare and relocated to Arizona.
To settle the allegations, ZookaWare and Carl Haugen, former director of Blue Penguin and now sole manager of Zookaware, agreed to:
- Not misrepresent the urgency or need for any product or service by falsely claiming that harmless programs and occurrences will harm the computer;
- Clearly and conspicuously disclose the terms of software subscriptions prior to purchase—including details such as cost, frequency of billing and providing a straightforward method of cancellation;
- Refrain from engaging in an annual renewal process without a customer’s express consent or without notifying the customer by e-mail or other means at least five days in advance of the renewal to give them an opportunity to cancel the subscription;
- Stop using pre-checked boxes or other methods to automatically add unwanted items to a customer’s on-line shopping cart;
- Cancel subscriptions upon the first notification from consumers;
- Respond within 48 hours to e-mails from customers who have purchased products or services and seek product assistance, refunds, cancellations or any other inquiry regarding their purchase or account;
- Stop “astroturfing;” and
- Refrain from making any material misrepresentations on their own Web sites about their products.
The defendants also agreed to pay:
- $40,000 in civil penalties with an additional $85,000 suspended;
- $57,000 in costs and attorneys’ fees; and
- Consumer restitution to Washington customers who:
- Purchased any Zookaware product between Jan. 1, 2009 and July 19, 2012; and
- Were charged automatic subscription or automatic renewal fees beyond the payment of their initial purchase.
Zookaware will contact eligible consumers by e-mail within 45 days and consumers must return their claims forms within 30 days of receiving notice. Consumers who believe they are eligible but do not receive notice should contact email@example.com.
The company will also be subject to civil penalties of $25,000 per violation for any future violations.
Contacts: Janelle Guthrie, Director of Communications, (360) 586-0725