FTC Urged To Clamp Down On Data Collection Online

Privacy advocates are renewing calls for the Federal Trade Commission to impose limits on online data collection and ad targeting.

"It should be evident to all that self-regulation to protect consumer privacy online has been a dismal failure," the Center for Digital Democracy and U.S. Public Interest Research Group wrote in comments submitted to the Federal Trade Commission in advance of its privacy roundtable next month. "We need strong baseline laws and regulations to ensure serious industry compliance."

The Interactive Advertising Bureau, which opposes new behavioral targeting regulations, doesn't plan to submit comments before the first roundtable, says Mike Zaneis, vice president for public policy.

"We're going to wait and see how this first day of roundtables goes, and see if it merits comments," Zaneis says. The FTC has scheduled the first of three day-long privacy discussions for Dec. 7.

The privacy advocates argue that Web companies are not providing consumers with enough power over the collection and use of their data. "Consumers are faced with a largely invisible and all-encompassing data collection apparatus, often operating automatically, that makes decisions about the prices and services they are offered," the groups write. They add that Web users "need to know, and should have the right to approve, the marketing segments into which they have been placed."

The advocacy groups also say the industry's new self-regulatory principles -- unveiled in July by the American Association of Advertising Agencies, Association of National Advertisers, Council of Better Business Bureaus, Direct Marketing Association, and the Interactive Advertising Bureau -- do not adequately protect consumers.

Among other criticisms, the privacy groups allege that the ad associations' new guidelines don't sufficiently guard sensitive data. The principles require companies to obtain consumers' consent to collect such data, but define it as financial account numbers, social security numbers, pharmaceutical prescriptions, or medical records about a specific individual. The privacy groups argue that the industry's definition of "sensitive" is far too narrow.

The digital rights organization Center for Democracy & Technology also filed comments that were critical of current online behavioral-targeting policies. The CDT called on the FTC to endorse broad fair information collection practices.

The FTC's current self-regulatory guidelines emphasize that companies should notify users about online tracking and targeting and allow them to opt out. But the CDT says that notice-and-consent regime doesn't go far enough because it only allows consumers to make a choice at the time of collection. "Long after data is collected, it lives in a Wild West of shared and sold personal profiles and databases that give consumers no control over how their identities will be tracked and used," the group wrote.

The CDT also expressed skepticism about whether industry self-regulation can protect consumers. "A self-regulatory system that relies on trade associations to provide implementation and accountability guidelines is clearly incomplete: the activities of non-members will remain unregulated," the organization argued.

Three years ago, the Center for Digital Democracy and U.S. Public Interest Group filed a petition with the FTC that kicked off the current debate about whether behavioral targeting compromises users' privacy. In January, they filed papers with the FTC alleging that mobile companies were using "unfair and deceptive" behavioral targeting strategies.