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.

Is your Freedom of Speech At Risk??? Well, Feds Say Bring On The Comments

At the order of the Obama administration, the Federal government has adopted a policy that will make it much easier for Federal agencies to use social media, according to OMBWatch, a site which follows the doings of the Office of Management and Budget. This is another, major step forward for officialdom in the social media arena -- and more proof that even the biggest, most risk-averse organizations can find value in social media strategies.

Basically, the OMB has issued a memo which waives cumbersome paperwork requirements for government communications that solicit or enable responses or feedback from private citizens. This paperwork was, ironically enough, required under the terms of the Paperwork Reduction Act of 1980.

Like all good Congressional legislation, the PRA seemed to accomplish the opposite of its name -- at least in this case -- by demanding copious documentation for any government publication that seeks input from regular folks (that's us). Specifically, the PRA requires Federal agencies to take out a control number from the OMB for every form requesting public feedback, which is enough of a disincentive to deter may Federal agencies from undertaking any truly interactive projects to, say, solicit suggestions about improving their Web pages.

Happily, the OMB has waived these requirements in accord with the Open Government Directive issued by the White House on December 8, 2009, according to OMBWatch. The waiver specifically exempts Web-based interactive technologies that enable "unstructured" feedback from the public -- a category that includes visitor comments on Web pages, as well as online initiatives from Federal agencies using sites like Facebook, Twitter, and so on. Anything soliciting "structured" feedback -- online forms, questionnaires, etc. -- is still subject to the terms of the PRA.

Thus the Feds have made a fairly important distinction between two types of communication, which didn't even really exist in 1980 when the PRA was passed. Back then, you had your questionnaires and forms, which were mailed to individuals, who for their part could write a letter and mail it to a Federal agency if they were motivated (read, enraged) enough. The "unstructured" feedback which might appear on agency Web pages clearly resembles the latter more than the former, and so should be exempt from any bureaucratic oversight which applies to communications originating with the government.

FTC Reviewing COPPA Rules

The FTC is seeking comment on whether changes should be made to rules imposing certain requirements on Web sites directed at children, including a mandate that they obtain parental consent before collecting personal information from children under the age of 13.

In a Federal Register notice Monday, the FTC said the Children's Online Privacy Protection Act, which went into effect in 2000, requires the agency to review the rules required by the law every five years. While the agency declined to make changes in 2005 when it first reviewed the rules for Web sites aimed at children under 13, the FTC said it now "believes that changes to the online environment over the past five years, including but not limited to children's increasing use of mobile technology to access the Internet, warrant reexamining the rule at this time."

In addition to parental consent, the current FTC rules imposed under COPPA also require Web sites aimed at children under 13 to secure the information they collect from children and bars them from requiring children to provide more information than is "reasonably necessary to participate" in activities provided on the site.

In its request for comments, which are due by June 30, the FTC is asking for input on such issues as whether the definition of "Internet" should be expanded to include mobile communications, interactive television and gaming and other activities and whether the defition of "personal information" also should be expanded to include persistent IP addresses, mobile geolocation data or information used to help target ads at specific Internet users. Other issues, the FTC is seeking comment on include whether changes should be made to the requirements that information be kept secure and private; the requirement that allows parents to review or delete personal information about their children; and on the provision barring the linking of participation in activities on a children's Web site to the collection of personal information.