Behavioral Advertising and Data Collection Remain in FTC Spotlight

Recent indications are that the FTC intends to issue a comprehensive report in 2013 regarding the ability of various companies, including ISPs, to track the activities of Internet users.  According to an associate director in the FTC’s Bureau of Consumer Protection, the anticipated report will differ from previous reports on Internet tracking that focused mainly upon data collection by advertising networks.

Most recently, the FTC has investigated various privacy issues that surround targeted advertising by advertising networks that track consumer activity on the Internet.  This form of behavioral advertising involves the collection of various forms of data in order to compile consumer profiles.

It is expected that the FTC will be expanding its consumer privacy-based focus from marketers to larger, more comprehensive platforms such as ISPs that have access to significant amounts of unencrypted consumer information.  Thus, the myriad of policy considerations for regulators will include whether express opt-in consent from consumers should be required prior to engage in comprehensive tracking activities.  Conversely, current Digital Advertising Alliance rules permit marketers to tailor advertisements utilizing collected data as long as consumers are notified about the practice, up-front, and given an opportunity to opt-out.

It also appears that the data brokerage industry and related privacy concerns shall continue to be scrutinized.  On the heels of the FTC’s recent issuance of orders to nine data brokers to provide the agency with information about how they collect and use consumer data, the FTC is expected to issue a follow-up report later this year.  The Commission’s concerns insofar as the data brokerage industry’s collection and use of consumer data center around increased transparency.

In fact, in 2012 the FTC recommended that Congress enact legislation to provide consumers with access to information about them held by a data broker.  The Commission also called on data brokers that compile information for marketing purposes to explore the idea of creating a centralized website where they could identify themselves to consumers and provide information on their policies.

Richard B. Newman is an Advertising and Marketing Law Attorney at Hinch Newman LLP.  He can be reached at (212) 486-9494 or via email at rnewman@hinchnewman.com.