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Internet Ad Groups Revise Privacy Program on FTC Concerns

FTC Says Advertisers Self-Policing on Privacy Falls Short
A coalition of online-advertising and marketing groups created this icon that websites post on or near ads that when clicked connects users to a page where they can block ads based on personal Internet browsing history. Source: Self-Regulatory Program for Online Behavioral Advertising

Nov. 8 (Bloomberg) -- An Internet-advertising industry program to enforce privacy safeguards is expanding in response to concerns from U.S. regulators and consumer-advocacy groups.

The voluntary program, announced last year by an advertising-industry coalition, calls for letting consumers block ads that are based on their Web-browsing habits. The U.S. Federal Trade Commission expressed concern that the program didn’t apply to other forms of online tracking.

The changes will let consumers stop other kinds of Internet-data collection, with the exception of information gathering required for companies’ “operations and system management,” said Stu Ingis, general counsel for the Digital Advertising Alliance, which administers the program, in an interview yesterday.

The alliance “has announced important changes to address how data can be collected and used online,” Jessica Rich, deputy director of the FTC’s consumer protection bureau, said in an e-mail yesterday. “We’ve been encouraging them to make these changes and believe it’s an important step for consumers and for self-regulation.”

Rich expressed concern in an August interview that the self-regulatory program didn’t go far enough to let consumers opt out of being tracked online. The FTC has power to act when companies engage in unfair and deceptive trade practices.

Under the revised program, participating companies will also be barred from collecting data on consumers’ Internet browsing to determine eligibility for employment, credit, medical treatment or insurance, Ingis said. The changes will take effect next year, he said.

Child Privacy Law

The Digital Advertising Alliance also said participating companies will have to comply with the Children’s Online Privacy Protection Act. The FTC in September proposed expanding the more than decade-old law to require such websites aimed at children younger than 13 to seek parents’ consent before collecting geographical location data or tracking online activities.

The Digital Advertising Alliance includes the Association of National Advertisers, the Direct Marketing Association and the Interactive Advertising Bureau. Bloomberg LP, the parent of Bloomberg News, is a member of ANA and IAB.

“These new guidelines fail to protect U.S. consumers from having their most sensitive information collected and used without their consent,” Jeffrey Chester, executive director of the Center for Digital Democracy, said in an e-mail yesterday. “The ad lobby has purposely crafted definitions that would enable marketers to collect and target consumers for their most sensitive financial and health concerns.”

Privacy Settlements

The Center for Digital Democracy is part of the Transatlantic Consumer Dialogue, a coalition of U.S. and European Union consumer and public-interest groups that called the self-regulatory program “inadequate” in a September letter to the FTC, and the Article 29 Working Party, a group of privacy watchdogs from the EU’s 27 nations.

The commission announced privacy-related settlements with two companies today. ScanScout, a network that places video ads on websites, agreed to settle commission charges that it deceptively claimed consumers could block targeted ads by changing their Web browser settings, the FTC said in a statement. The settlement requires that the company improve data-collection disclosures and give consumers a “user-friendly” way to opt of being tracked, the agency said.

The operator of a social-networking website for children, www.skidekids.com, also settled commission charges that it collected personal information on about 5,600 children without obtaining parental consent as required under the FTC’s rule enforcing the Children’s Online Privacy Protection Act, according to the commission.

Under the settlement, the operator of the site is required to destroy data collected from children in violation of the rule, the agency said.

To contact the reporter on this story: Eric Engleman in Washington at eengleman1@bloomberg.net

To contact the editor responsible for this story: Michael Shepard at mshepard7@bloomberg.net

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