Judge Strikes Down Arpu McAfee Pop-Up Ad Class Action Settlement

A federal judge has refused to approve a class action lawsuit settlement that would resolve claims that McAfee and an advertiser conspired to defraud customers and share their billing information, saying the settlement agreement “does not pass muster.”

The 2010 class action lawsuit claimed that McAfee and online advertising partner Arpu (dba TryandBuy.com) used “Try It Now” pop-up ads that tricked McAfee customers into purchasing the Arpu product “PerfectSpeed.” Customers said they clicked the pop-up ad because they thought clicking was a necessary step toward downloading McAfee’s anti-virus software. However, they were actually unwittingly agreeing to purchase the product, which cost $4.95 a month after a 30-day free trial. Arpu was able to charge customers by using the credit card information already on file with McAfee, according to the class action lawsuit.

Class Members who did not download the PerfectSpeed software reached a $1.2 million class action lawsuit settlement with McAfee and Arpu in July 2011. A separate Class of customers who downloaded the software never reached a final agreement.

U.S. District Judge Lucy Koh struck down the $1.2 million class action settlement agreement, saying it is impossible to differentiate between Class Members who actually downloaded Arpu’s software and those that did not.

“It is not even possible to know, therefore, what percentage of the settlement Class is entitled to recover the settlement benefits, and what percentage is not entitled to recover anything under the terms of the agreement,” Koh wrote.

“Some Class Members may have been misled into believing that the software was provided by McAfee; never intended to purchase the software despite the download; or did not intend to transfer their credit or debit card information to a third party,” she added. “On the other hand, other downloaders may have knowingly and purposefully downloaded the Arpu software with the intention to pay the monthly charges after the 30-day free trial period ended. Thus, the claims of the subclasses are not common.”

Koh concluded that her rejection of the McAfee, Arpu class action settlement was also based on the fact that it is not fair that members of the subclass who did download the software would receive nothing from the settlement.

“It is necessary here to protect the rights of the absent Class Members of the subclass of claimants who downloaded the Arpu software and who are essentially releasing their claims against McAfee and Arpu for no consideration,” Koh wrote. “In light of the reservations identified above, the Court cannot find that the proposed Class may be properly certified or that the proposed settlement is fair, reasonable and adequate.”