Consumer Groups Call for FTC Investigation of Online Advertising and Consumer Tracking and Targeting Practices
Consumer Privacy Must Be Protected from Digital Commercial Shadowing
Privacy Violations Demand an Injunction Against Microsoft and Others
Washington, DC: The Center for Digital Democracy (CDD) and the U.S. Public Interest Research Group (US PIRG), two of the leading public-interest advocacy groups working on behalf of a more diverse and competitive online environment, filed a complaint today with the Federal Trade Commission, calling on the commission to undertake an immediate, formal investigation of online advertising practices. As the groups make clear in their 50-page filing (PDF), the data collection and interactive marketing system that is shaping the entire U.S. electronic marketplace is being built to aggressively track Internet users wherever they go, creating data profiles used in ever-more sophisticated and personalized "one-to-one" targeting schemes.
"Unfortunately, over the last several years the FTC has largely ignored the critical developments of the electronic marketplace that have placed the privacy of every American at risk," declared Jeff Chester, CDD executive director. "The FTC should long ago have sounded a very public alarm--and called for action--concerning the data collection practices stemming from such fields as Web analytics, online advertising networks, behavioral targeting, and rich 'virtual reality' media, all of which threaten the privacy of the U.S. public."
Current privacy disclosure policies, CDD and US PIRG contend, are totally inadequate, failing to effectively inform users what data are being collected and how that information is subsequently used. While many companies claim they collect only "non-personally identifiable" information, they fail to acknowledge the tremendous amounts of data compiled and associated with each unique visitor who visits their website. Thus even if these companies don't know the names and addresses of users, they literally know every move those users make online, through sophisticated online tracking and analysis technologies.
“The emergence of this on-line tracking and profiling system has snuck up on both consumers and policymakers and is much more than a privacy issue,” said U.S. PIRG Consumer Program Director Ed Mierzwinski. “Its effect has been to put enormous amounts of consumer information into the hands of sellers, leaving buyer-consumers at risk of unfair pricing schemes and with fewer choices than the Internet is touted to provide.”
It is therefore incumbent on the Federal Trade Commission, according to the CDD/PIRG complaint, to protect consumers from unfair and deceptive practices by using its authority under Section 5 of the FTC Act to address this issue on a variety of fronts:
• launching an immediate investigation into the online marketplace in light of this new environment
• exposing practices that compromise user privacy
• issuing the necessary injunctions to halt current practices that abuse consumers
• crafting policies—and recommending federal legislation—to prevent such abuses.
As a first step in this direction, the complaint urges the FTC to look closely at Microsoft's new set of adCenter services, a wide-ranging data-collection and ad-targeting scheme that is deceptive and unfair to millions of users. Especially disturbing is Microsoft's use of data gleaned from its Hotmail service (which attracts over 30 million users every month) to sharpen its ad-targeting efforts, and those of its adCenter clients.
"Microsoft, like Google and Yahoo, is actively rewriting the rules that govern the online marketplace," explained Chester. "It is the FTC's job to make certain that these rules reflect more than corporate self-interest. The public interest matters, too, and it is the FTC's responsibility to protect and promote that vital perspective, by issuing injunctions against the most egregious of the new invasive advertising practices, which are fully described in our complaint."
The Center for Digital Democracy (www.democraticmedia.org) is a Washington-based nonprofit organization dedicated to maintaining the diversity and openness of the media, focusing especially on the new broadband communications systems. CDD's executive director played a leading role in the passage of the federal Children's Online Privacy Protection Act of 1998.
U.S. Public Interest Research Group (www.uspirg.org) serves as the federation of state PIRGs, which are non-profit, non-partisan public interest advocacy organizations that take on powerful interests on behalf of the American public. Source
More From The Center for Digital Democracy:
A Tour of Online Advertising's Two-Way Mirrors
On 1 November the Center for Digital Democracy (CDD) and the U.S. Public Internet Research Group (US PIRG) filed a complaint with the Federal Trade Commission, calling for an immediate, formal investigation of online advertising, consumer tracking, and targeting practices. (A copy of the 50-page filing is available online [PDF], along with an accompanying press release.) Current privacy policies are inadequate, CDD and US PIRG believe, failing as they do to inform users what data are being collected and how that information will subsequently be used. Nor are consumers prepared for the sophisticated technologies and techniques--ranging from user tracking and Web analytics to behavioral targeting and audience segmentation--that online advertisers employ in their effort to create personalized, "one-to-one" marketing campaigns. Needed is a policy of opt-in and full disclosure, in which Internet users are fully apprised of the data collection practices of the sites they visit, along with a requirement that companies secure a visitor's explicit consent before collecting any personal information. Currently, the ad and marketing industries enjoy the advantage of automatically (and surreptitiously) collecting whatever data they desire, without disclosing the extent and subsequent use of the data collected.
In their call for the FTC to address these important issues (by investigating and exposing unfair and deceptive practices, issuing the necessary injunctions to halt those practices that violate consumer privacy, and establishing policies to prevent such abuses in the future), CDD and US PIRG identified four areas of particular concern:
While these are complex areas that involve sophisticated (and often transparent) technologies, it's possible to get a better sense of how online advertisers monitor, track, and target us online by visiting their websites, to get a glimpse "behind the curtain" of the new online marketing machinery.Included in the discussion below are links to many of the key players in the online advertising industry, focusing on those, including Microsoft, whose marketing practices routinely threaten the privacy of millions of Internet users.You might want to check out the CDC's 10 question FAQ PDF File