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FTC Staff Proposal Raises the Bar for Behavioral Advertising

By D. Reed Freeman, Jr.
February 29, 2008
On Dec. 20, the Federal Trade Commission ('FTC') staff released for public comment proposed online behavioral-advertising privacy principles ('Principles') in an effort to guide self-regulation of this nascent industry (see, FTC, Press Release, 'FTC Staff Proposes Online Behavioral Advertising Privacy Principles,' at www.ftc.gov/opa/2007/12/principles.shtm).

The release of these Principles followed a two-day Town Hall meeting the FTC held late last year on behavioral advertising, which itself followed the FTC's Tech-Ade Workshop in 2006. The FTC staff's Principles include specific recommendations and questions for industry regarding:

  • Transparency and consumer control (including notice and choice);
  • Data security;
  • Data retention;
  • Changes to privacy policies (including a proposed opt-in for the retroactive application of material changes to privacy policies); and
  • Questions regarding how sensitive data should be treated.

Comments on the proposed Principles were initially due by Feb. 22, but the deadline was extended to April 11. Comments are likely to range from the very specific ' some trade associations may propose entirely new or modified self-regulatory principles for their members ' to the general, with other trade associations and coalitions offering arguments, and perhaps even econometric and other statistical evidence supporting arguments opposed to the staff's proposals.

While the FTC document recognizes that behavioral advertising provides a number of benefits to consumers, it is important to understand that the staff's proposed Principles are based on the premises that:

  • Consumers are unaware of behavioral-advertising practices or cannot discern when such practices are used;
  • Transparency and consumer autonomy are critical to consumer trust and to the online marketplace; and
  • Data collected for behavioral advertising may fall into the wrong hands or be used for unanticipated purposes.

Broad Definition of Behavioral Advertising

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