Federal behavioral ad proposal stirs disagreement

The FTC's controversial new behavioral advertising guidelines are drawing conflicting responses from entities ranging from Microsoft to consumer privacy advocates and a newspaper lobbying group.

Geared to industry self-regulation, the US Federal Trade Commission's proposed principles call for businesses to provide a "clear and conspicuous notice" to consumers about which data is being collected, along with a way for consumers to opt out of providing information to Web sites and advertisers.

Other elements of the FTC's plan deal specifically with data retention and the collection of sensitive personal information.

The FTC first issued the guidelines on December 20, after holding a workshop on the subject of behavioral advertising. Since then, a number of organizations have responded to the government agency's invitation for comment, including Microsoft, the Newspaper Association of America (NAA), and advocacy groups US-PIRG and the Center for Democracy and Technology (CDT).

Microsoft entered the fray on Friday with its own proposal for a five-tiered system. Its suggested solution stipulates the use of different standards under different sets of circumstances:

• When Web sites are actually engaging in behavioral advertising
• When Web site visitors' data is collected for online advertising
• When ads are being delivered on sites not "related" to each other
• When personally identifiable information is used
• When sensitive personal data is involved

Microsoft's recommendations are based on its own internally developed Privacy Principles for Live Search and Targeting, initiated in 2007 under the theory that privacy protections should be strongest in circumstances where the risks to consumers are greatest.

The NAA, on the other hand, is opposing the FTC's guidelines entirely on the grounds that the policy could impinge upon First Amendment rights to free speech.

Yet some other groups, including Democratic Media, disagree vehemently with the NAA.

"Any reasonable person should see that giving readers and users (hello newspapers losing audience) control over their data and information is not a First Amendment conflict," according to a blog posting on the Democratic Media site.

The NAA has also expressed concerns that, although the FCC's guidelines are initially targeted at self-regulation, they might get embedded in regulations somewhere down the line. But US-PIRG and the CDT have voiced exactly the opposite perspective -- arguing, among other things, that self-regulation will not be enough.

"Clearly, the time for regulation is here -- but not merely self-regulation," the two groups contended, in the groups' jointly filed comments to the FTC. "The history of self-regulation clearly [shows] that in the absence of meaningful legal rules, the level of consumer protection will be minimal."

11:55 am EDT April 16, 2008 - On Tuesday, two consumer groups added to the clamor surrounding the FTC's new behavioral ad guidelines by suggesting the creation of a "do not track" list that would let computers prohibit advertisers from collecting any data about them online.

The Consumers Union and the Consumer Federation of America also asked the agency to ban all collection of sensitive data such as health information over the Internet, unless a consumer gives explicit consent to a company.

The first of these proposals is geared to guidelines the FTC is developing around giving consumers a way of opting out of providing information to advertisers.

Guidelines are also in the works for notifying consumers about which data is being gathered, as well as for data retention and special considerations around sensitive data. These guidelines would impose self-regulation around Internet companies' practices in the areas of tracking computer users' Web searches, sites visited, and other online activities so as to target ads at specific individuals.

Meanwhile, in its recently issued Spring Report, the FTC made a tacit admission that behavioral advertising can be used in "deceptive and unfair" manners, stating, "Applying traditional principles of deception and unfairness to acts and practices related to new monitoring technologies like sensor networks and RFID, as well as to behavioral targeting and mobile marketing, will focus the agency's inquiry on practices likely to injure consumers."