In an effort to fend off federal regulation, major trade groups in the advertising industry have announced stricter guidelines on how their members use and collect online data.
In a report to be released Thursday, a consortium of the trade groups intends to address a growing concern in Washington and among consumer advocates that people are being tracked too much online, with information about their Web surfing, shopping habits and overall interests being collected for advertising purposes.
Congress held hearings on the subject in June, asking executives from Facebook, Google and Yahoo to testify, and the Federal Trade Commission issued a report in February that urged updated principles for self-regulation. All along, most advertisers, agencies and publishers have been arguing that they can keep an eye on their own practices, and don’t need government intervention.
The jump in interest from Washington hastened the report’s release, said Stuart P. Ingis, a partner at the Venable law firm and a lawyer for the trade groups.
“We believe that self-regulation, historically, it’s proven to be far more dynamic and flexible in this area,” Mr. Ingis said. “Legislation is a pretty blunt instrument and we hope, legislation or not, these are the right standards.”
The report, “Self-Regulatory Principles for Online Behavioral Advertising,” reflects several of the commission’s suggestions from February. The principles are meant to go into effect in 2010, affecting the more than 5,000 companies that belong to the sponsoring organizations, including Google, Microsoft, Yahoo, Disney and Verizon.
“For years, consumer groups, and most recently the F.T.C. and people on the Hill, had been calling for transparency at the time of collection” of data, Mr. Ingis said. “So for the first time — we think it’s a monumental shift — there will be transparency provided across the ecosystem.”
Mr. Ingis said the exact form of the notice had not been decided on — it could be a link that says “Why did I get this?” or “interest-based advertising,” meaning information on advertising based on Web visits and behaviors, he said. “All that is to be determined following the rollout of the principles,” he said. “The requirement is that it be clear, meaningfully prominent and uniform.”
The report also suggests an enforcement process, so that competitors or consumers can bring complaints if a company violates the principles. “Programs will also, at a minimum, publicly report instances of noncompliance and refer entities that do not correct violations to the appropriate government agencies,” the report says.
It also says consumers must approve the collection of “sensitive data” — mostly on finances or health.
Some privacy advocates have been pushing for more stringent rules, saying, for instance, that consumers must explicitly approve all data collection.
Mr. Ingis said that was not feasible.
“If you had that as a default, you would wind up undercutting significantly the economic underpinnings for all the stuff the public loves,” he said. “The way, operationally, that would work is every time a consumer’s doing their Web surfing, you’d be requiring them to click through all these options. Consumers would hate that.”
Another issue privacy watchdogs have raised is that consumers have no access to the data being collected about them — it is all done behind the scenes.
Giving consumers access to the data is “an interesting concept,” Mr. Ingis said, noting that what the companies collect shows up as “a bunch of ones and zeros.”
“The data is in computer wording, programming speak, and to the consumer would mean nothing,” he said.
(A handful of online companies, including Google, have translated the data, however, and have said they will give consumers access.)
“Of course they can give the profile information, the profile information can be translated,” said Jeffrey Chester, executive director of the Center for Digital Democracy, a privacy advocacy group, when asked about Mr. Ingis’s statement. “People need to have access to their entire profile, and this is a thinly veiled excuse so that the companies can retain the data without giving consumers control over their information.”
The announcement of the report includes an advertising campaign to publicize the new standards. Members of the consortium include the American Association of Advertising Agencies, the Association of National Advertisers (which represents companies that advertise, like McDonald’s or General Electric) and the Interactive Advertising Bureau. Their members have pledged 500 million impressions, or views by readers, over the next year and a half to promote the changes.
“I am gratified that a group of influential associations — representing a significant component of the Internet community — has responded to so many of the privacy concerns raised by my colleagues and myself,” Pamela Jones Harbour, a member of the Federal Trade Commission, said in a statement. The report has “the potential to dramatically advance the cause of consumer privacy,” she said.
Charles H. Kennedy, a lawyer at Morrison & Foerster who focuses on communications and advertising and did not work on the report, gives it a mixed review.
“These principles are especially strong in the area of notice or transparency,” Mr. Kennedy said. “It’s a little less clear, I think, on consent and how it’s going to be obtained and what it’s going to consist of.”
He said that although the Federal Trade Commission seemed to be increasing its enforcement in the online-marketing world — last month, it settled with Sears over charges that its marketing software did not disclose all the information it collected — he expected self-regulation would win out.
“What we will see at minimum is the F.T.C. will continue to bring individual enforcement actions, like the one they brought against Sears, that will be intended to signal to industry the kind of practices the agency wants to see,” he said. “It’s sort of an informal way of making rules without making rules.”
He added, “I think self-regulation ultimately is going to be the solution, and this is a big step in the right direction.”
Stephanie Clifford, The New York Times. July 2, 2009
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