FTC revises online behavioral advertising guidelines, targets mobile and emerging platforms: Critics say new rules do not go far enough

The Federal Trade Commission today issued revised guidelines for how wireless and other communications companies should police themselves to protect consumers’ privacy in behavioral advertising. But a top watchdog group said the report reflects the hands-off regulatory philosophy of the past administration and criticized President Obama for having failed so far to install new leadership at the agency.
The new report appears to address wireline as well as wireless behavioral advertising, a practice that involves the tracking of consumers’ online activities to better hone targeted advertising.
“Where the data collection occurs outside the traditional Web site context, companies should develop alternative methods of disclosure and consumer choice that meet the [new] standards,” the FTC stated in describing the principle of transparency and consumer control. The agency said every Web site where data is collected should include a clear, concise and prominent statement that consumers’ online activities are being gathered for future advertising tailored to their interests – and that consumers can choose whether or not to permit such data collection for that purpose.
The other three self-regulatory principles governing online behavioral advertising are:
–reasonable security and limited data retention for consumer data;
–affirmative express consent for material changes to existing privacy promises;
–and affirmative express consent (or prohibition against) using sensitive data for behavioral advertising.
FTC members Pamela Jones Harbour and Jon Leibowitz issued concurring statements in which they signaled the agency could take bolder steps in the future.
“Industry needs to do a better job of meaningful, rigorous self-regulation or it will certainly invite legislation by Congress and a more regulatory approach by our commission,” said Leibowitz. “Put simply, this could be the last clear chance to show that self-regulation can – and will – effectively protect consumers’ privacy in a dynamic online marketplace.”
“This staff report, while commendable, focuses too narrowly,” Harbour said. “Threats to consumer privacy abound, both online and offline, and behavioral advertising represents just one aspect of a multifaceted privacy conundrum surrounding data collection and use. I would prefer that the commission take a more comprehensive approach to privacy, and evaluate behavioral advertising within that broader context.”
Harbour added: “New technologies signal a need to be more circumspect in developing broadly applicable principles. As processing capacity improves and storage prices decline, companies can and will more easily process and store vast quantities of data. As constraints on time and space are alleviated, privacy concerns likely will become more germane on new platforms and devices. The emerging areas of deep pack inspection, mobile advertising, electronic personal health records, and cloud computing are a few examples where further inquiry are needed.”
Wireless industry association CTIA and the Mobile Marketing Association were not immediately available for comment on the report.
Jeff Chester, head of the Center for Digital Democracy, said the staff report doesn’t necessarily reflect the thinking of the new administration.
“[T]hese principles were crafted within the narrow confines of the Bush administration philosophy prevailing at the FTC,” said Chester. “Why is the Obama White House failing to ensure a change of leadership at the FTC? The agency is responsible for overseeing a huge portion of the economy, including critical financial issues. It’s also supposed to be the leading agency on consumer protection issues. The Obama White House should have by now found someone who would led the FTC, so it can better protect the public.”
The CDD and the U.S. Public Interest Research Group recently filed a complaint at the FTC calling for an inquiry and injunctive relief concerning unfair and deceptive mobile marketing practices.