FTC Urged to Limit Behavioral Advertising Online

Consumer Groups Call for Restrictions, Propose Complete Ban on Tracking Children

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WASHINGTON (AdAge.com) -- Calling web users "outgunned," consumer groups are urging the Federal Trade Commission to impose major curbs on marketers' ability to profile consumers using web-surfing data without permission and have proposed a complete ban on tracking web surfers under 18.

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Eight groups, including the American Psychological Association, the Center for Digital Democracy and Children Now, argued that younger children can't adequately distinguish between ads and other content. They said teens, while more sophisticated, are still less able to understand the long-term impact of providing information to advertisers and third parties and are unable to meaningfully consent to providing information.

'Vulnerable population'
"Children do not realize that websites collect personal information for advertising purposes. Behavioral advertising presents a prime example of how children ... cannot understand and make meaningful choices concerning online data collection. The FTC must protect this vulnerable population," the groups said.

The Network Advertising Initiative, an ad network trade group, agreed that children under 13 shouldn't be targeted by ads and stated as such in its new guidelines.

However, in a filing to the FTC, it said that "online behavioral advertising has not [been] shown to create increased risk to consumers," and that behavioral advertising provides "significant benefits" to consumers and businesses, helping to make high-quality content and services on the internet free and providing consumers with information tailored to products and services they are interested in.

Like the NAI, nine ad groups, including the Association of National Advertisers and the American Association of Advertising Agencies, question the rationale of regulating behavioral targeting before its hurtful effect on consumers has been demonstrated.

The competing views of what the FTC should do were filed last week in the opening round of a key debate over how closely the government should regulate behavioral tracking. The FTC earlier this year offered some suggestion of what minimum industry self-regulatory standards would be but asked for comments. The comments were due Friday.

"In the technological battle with online advertisers, the consumer is outgunned," the Consumer Federation of America and Consumers Union charged in a joint filing. "There is a fundamental mismatch between the technologies of tracking and targeting and consumers' ability to exercise informed judgment and control over their personal data."

'Invasion of privacy'
They called behavioral targeting "an invasion of privacy and an inherently deceptive practice" and proposed the FTC establish a "do not track" registry, similar to its "do not call" list. They also proposed the collection of "sensitive data" be banned. (This tactic was first proposed last fall, at an FTC town hall meeting that addressed behavioral targeting.)

The Online Publishers Association, however, pressed the importance of advertising to support high-quality content and services.

"Online advertising is the lifeblood of digital publishing," wrote OPA President Pam Horan. "Over 90 percent of the revenue generated by OPA members is generated by advertising and the ability of OPA members to continue to sell high-value, targeted advertising will be critical to their future ability to create and distribute high-quality news, information and entertainment content on the Web, free of charge."

Microsoft and Google, in separate filings, argued that tracking -- including tracking of personally identifiably information -- should be allowed, but the key is clearly separating day-to-day information used to track usage and generate ads from tracking of more sensitive data.

Microsoft proposed the FTC examine privacy as a five-tiered pyramid: the idea is that there are various levels of tracking, each posing a different threat level . Presenting the least amount of risk are sites that simply track their own visitors and page views -- basic ad-serving technologies. From there, marketers move into targeting people based on data from multiple sites; behavioral targeting; personally identifiable information; and, finally, opt-in sensitive personally identifiable information, which poses the greatest risk and should be treated with the highest scrutiny.

User's choice
Microsoft said sites should be able to gather personally identifiable data as long as users are given a chance to opt out. Sites should also be able to combine personally identifiable information gathered offline with non-personally identifiable profiles gathered online, as long as it gets a user's consent.

Google urged the FTC to distinguish between contextual advertising that gives consumers ads based on search terms and behavioral advertising, which delivers ads based on profiling of what a consumer does online. It suggested contextual "provides great benefits to our users" with little harm, even when it delivers medical information, because no personally-identifiable information is given.

The National Retail Federation's Shop.org also questioned whether consumers were being harmed by profiling, saying the FTC's concern may be "premature." It also suggested that while there are legitimate concerns about "sensitive" data, defining what is "sensitive" has to be done carefully. It noted that some broad definitions could limit advertising of religious group sites, sites that sell vitamins or travel sites selling to recently divorced or gay adults.
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