Watchdogs Ask FTC To Probe 'Behavioral Targeting On Steroids'

A coalition of advocacy organizations led by the Center for Digital Democracy is asking the Federal Trade Commission to investigate companies that are merging online and offline data about Web users in order to serve targeted ads to highly specific audiences.

Advocates have filed other complaints about online behavioral advertising, or serving users ads based on sites visited, but they say that newer methods of ad targeting are especially problematic -- in part because of the extremely detailed user profiles that result from integrating online and offline information.

"It's behavioral targeting on steroids," says Jeff Chester, CDD's executive director. "Online marketers have made what was science fiction in 'Minority Report' now a reality. They have created a stunning and impressive -- but deeply disturbing -- automated system that, while boosting revenues and efficiency, has very serious consequences to consumers."

The complaint alleges that the "massive and stealth data collection apparatus" threatens privacy and also "robs individual users of the ability to reap the financial benefits of their own data."

Joining CDD in the filing are the U.S. Public Interest Research Group and the World Privacy Forum. The groups are asking for a probe of a host of Web companies, including Microsoft, Google and Yahoo.

They are asking the FTC to require companies that are "involved in real-time online tracking and auction bidding, including providing related data optimization" to obtain consumers' opt-in consent.

"The online marketing industry has to begin paying attention to this notion of consumer empowerment," Chester says.

In addition, the groups argue that consumers should reap some financial reward when data about them is used to convince marketers to pay a premium for ads. "The availability of so-called free content is an insufficient return to a consumer for their loss of privacy, including their autonomy," they allege.

The online ad industry generally argues that targeting poses no privacy threat because companies don't know individuals' names or other identifying information. Also, they say, self-regulatory principles require companies to allow users to opt out of targeting.

But the advocates specifically challenge the idea that targeting is anonymous simply because marketers don't have so-called personally identifiable information. The groups point to a recent spate of deals, such as eXelate's arrangement to add Nielsen's PRIZM data to users' cookies, to show that companies are compiling far more detailed profiles than in the past.

"The incorporation of outside data, including behavioral information, on a single user or set of users, illustrates the need for the FTC to quickly clarify to marketers that they can no longer hide behind the flimsy excuse that targeting is ok because it isn't so-called personally identifiable," the complaint alleges.

In 2006, the CDD and U.S. Public Interest Research Group filed an FTC complaint that kicked off much of the current debate in Washington about behavioral targeting and privacy.