Dec. 1 (Bloomberg) -- The U.S. Federal Trade Commission called for a do-not-track option for online browsing and pressed advertisers to make their data practices clearer for consumers, in staff recommendations on privacy.
The report released today, which the agency has been preparing for the past year, is aimed at providing a framework for improving privacy as consumers shop and communicate using the Internet. Data are sometimes collected online “in an irresponsible or even reckless manner,” according to the report.
“Technological and business ingenuity has spawned a whole new world,” FTC Chairman Jonathan Leibowitz said on a conference call with reporters. “The FTC wants to ensure that this thriving marketplace is built on sound privacy practices and consumer choice.”
The do-not-track proposal is aimed at online advertisers’ practice of recording consumers’ movements on the Internet, compiling a profile of their preferences in order to target them for marketing. The most practical way to give consumers options is through a setting on the computer browser signaling their choices for collecting and using data, according to the report.
Companies may be unwilling to embrace such a proposal given the potential to sell products to people based on their interests, said Lisa Sotto, a privacy lawyer with Hunton & Williams in New York who advises companies on advertising, data and security matters.
“Issue-based advertising really is the holy grail for marketers,” said Sotto. “The ability to speak directly to an audience that is most receptive to your message is very exciting. The idea that people may be able to turn off in droves is a difficult pill to swallow.”
Online Ad Revenue
Online advertising revenue swelled to $12.1 billion in the first half of 2010, up 11 percent from the same period a year earlier, according to the Interactive Advertising Bureau and PricewaterhouseCoopers LLP.
A coalition of online marketers and advertisers opposes a federally managed system or a law that would dictate a do-not-track framework and recently introduced a self-regulatory initiative they say is a step in the right direction.
“Industry needs to redouble its efforts in self regulation,” said Mike Zaneis, senior vice president and general counsel of the Interactive Advertising Bureau, which represents more than 460 sellers of online advertisers and is part of the self-regulatory initiative led by the American Association of Advertising Agencies and the American Advertising Federation for a total of 5,000 marketers.
Zaneis said 58 companies started complying with an opt-out icon introduced last week letting consumers say they don’t want to be tracked and 30 more companies are ready to add the symbol on their websites. “We don’t think a do-not-track law is necessary,” Zaneis said.
Proposals letting online users tell Internet sites not to collect and analyze information about them based on their online history are backed by consumer groups. The idea is based on the do-not-call register the FTC set up in 2003 that lets consumers block telemarketing calls at home.
“Some consumers are troubled by the collection and sharing of their information,” the staff said in the report. “Others have no idea that any of this information collection and sharing is taking place.” Some “may view it as worthwhile,” according to the report.
The FTC report also calls for industry to provide prominent, simple and clear privacy notices and allow consumers to review the data they have collected about them.
“Industry must step up to the plate,” Leibowitz said. “The value of industry doing something itself is that they can move more quickly than legislation.” The FTC doesn’t currently have a position on the do-not-track measure, he said.
The do-not-track plan is a partial solution, said Susan Grant, director of consumer protection at the Consumer Federation of America, which represents more than 300 national, state and local consumer groups.
“It doesn’t resolve all the issues raised by behavioral advertising, but it would give people more control over the collection and use of their information until we can hash out the rest of the complex issues that would be involved in getting some baseline privacy regulation,” Grant said.
Chris Soghoian, a privacy and security researcher, said opt-out proposals can be tricky with strong solutions likely to be opposed by industry.
“There’s a difference between ‘do not track’ and ‘do not use,’” Soghoian said today at a privacy conference organized by Consumer Watchdog in Washington. “Even if you opt-out, the advertisers still track you around the Web. I don’t think the ad networks are going to accept any kind of strong opt-out mechanism without having their arms twisted.”
David Vladeck, director of the FTC Bureau of Consumer Protection, said today that the agency doesn’t have authority to manage and enforce do-not-track, which would require an act of Congress.
“There are ways we can coax, cajole and charm industry, but I don’t believe the FTC has the existing authority to mandate a do-not-track system,’” Vladeck said, speaking at the privacy conference in Washington today.
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