FTC backs self-regulation for Web ads

Bambi Francisco Roizen · February 13, 2009 · Short URL: https://vator.tv/n/6c8

Internet companies applaud, but they have a lot to do to step up and comply

 If you're a targeted user on the Web - which means everybody - don't expect the government to protect you from deceptive targeting and capturing of data by annoying advertisers and marketers. 

The Federal Trade Commission on Thursday supported self-regulation as a way to protect consumer privacy amid an increase in targeted online advertisements. The FTC released a report that laid out principles of privacy practices to govern self-regulatory efforts around collecting activities of users on the Web, such as pages they visit and searches they make.

Essentially, the FTC states that Web sites need to make it "clear" and provide "prominent notice" regarding behavioral advertising. Additionally, consumers need to be able to "choose whether to have their information collected for such purpose."

The FTC also says that privacy protection also covers any data "that reasonably can be associated with a particular consumer or computer or other device," not just personally identifiable data, such as social security numbers, financial information, health information and information about children.

Here's a highlight from the report, which is available on the FTC site:

The report points out that most of the public comments the FTC received concern the scope of the proposed principles. For example, commenters discussed whether it is necessary to provide privacy protections for data that is not personally identifiable. In response, the report states that privacy protections should cover any data that reasonably can be associated with a particular consumer or computer or other device.

Also, commenters questioned the need to apply the principles to (1) “first party” behavioral advertising, in which a Web site collects consumer information to deliver targeted advertising at its site, but does not share any of that information with third parties, and (2) contextual advertising, which targets advertisements based on the Web page a consumer is viewing or a search query the consumer has made, and involves little or no data storage. The report concludes that fewer privacy concerns may be associated with “first-party” and “contextual” advertising than with other behavioral advertising, and concludes that it is not necessary to include such advertising within the scope of the principles. The report notes, however, that regardless of the scope of the principles, companies must still comply with all applicable privacy laws, some of which may impose requirements that are similar to those established by the principles.

The first principle – transparency and consumer control – remains unchanged from the proposed principles. Accordingly, Web sites are expected to provide clear and prominent notice regarding behavioral advertising, as well as an easily accessible way for consumers to choose whether to have their information collected for such purpose. Noting that privacy policies posted on companies’ Web sites often are long and difficult to understand, the report encourages firms to design creative and effective disclosure mechanisms that are separate from their privacy policies. The report also states that companies that collect information outside the traditional Web site context – for example, through a mobile device or by an Internet Service Provider – should develop disclosure mechanisms that are meaningful and effective for these contexts.

Self-regulation is one of the best ways to govern in many cases, particular when an industry is a quickly-evolving one that needs constant innovation. If the industry doesn't help itself and improve its own practices, however, then the FTC may have to come back with some harsh regulations. No one who believes in innovation wants that.

(Image source: theonlinecitizen.files)

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Bambi Francisco Roizen

Founder and CEO of Vator, a media and research firm for entrepreneurs and investors; Managing Director of Vator Health Fund; Co-Founder of Invent Health; Author and award-winning journalist.

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