CDD, U.S. PIRG, and World Privacy Forum Call on Federal Trade Commission to Investigate Data Collection “Wild West” Involving Real-time Advertising Auctions and Data Exchanges

PRESS RELEASE

Urge FTC to Develop Rules to Protect Consumer Privacy in the New Personal Data Marketplace

Washington, DC: In a complaint filed today with the Federal Trade Commission, the Center for Digital Democracy, U.S. PIRG, and the World Privacy Forum challenged the commission to investigate the growing privacy threats to consumers from the practices conducted by the real-time data-targeting auction and exchange online marketplace. Increasingly and largely unknown to the public, technologies enabling the real-time profiling, targeting, and auctioning of consumers is becoming commonplace. Adding to the privacy threat, explains the new complaint, is the incorporation and expanding role of an array of outside data sources for sale online that provide detailed information on a consumer.

“This massive and stealth data collection apparatus threatens user privacy,” the 32-page filing explains. “It also robs individual users of the ability to reap the financial benefits of their own data—while publishers, ad exchangers and information brokers … cash in on this information.”  Among the companies cited in the complaint are Google, Yahoo, PubMatic, TARGUSinfo, MediaMath, eXelate, Rubicon Project, AppNexus, and Rocket Fuel. The complaint also cites the failure of privacy policies and self-regulation to meaningfully safeguard consumers.

“FTC inaction,” declared CDD Executive Director Jeff Chester, “has encouraged the data collection and ad targeting industry to expand the use of consumer information for personalized advertising. The commission’s failure to adequately protect the privacy of consumer transactions online, including those that involve financial and other sensitive information, is irresponsible. U.S. consumers, especially during this time of economic hardship for so many, need a commission that is proactive in protecting their interests.”

“Consumers will be most shocked to learn that companies are instantaneously combining the details of their online lives with information from previously unconnected offline databases without their knowledge, let alone consent,” said U.S. PIRG Consumer Program Director Ed Mierzwinski. “In just the last few years, a growing and barely regulated network of sellers and marketers has gained massive information advantages over consumers.”

Recent developments in online profiling and behavioral targeting—including the instantaneous sale and trading of individual users—have all contributed to what CDD’s filing termed a veritable “Wild West” of data collection. Participating companies are employing “practices that fail either to protect consumer privacy or to provide for reasonable understanding of the data collection process, including significant variations in how cookies are stored and the outside data sources used.”  For its part, the advertising industry has been anything but shy in describing the power of the new real-time online ad profiling and auction system. “…Internet ad exchanges,” explains one online marketer quoted in the complaint, “… are basically markets for eyeballs on the Web. Advertisers bid against each other in real time for the ability to direct a message at a single Web surfer. The trades take 50 milliseconds to complete.”

Accordingly, CDD, U.S. PIRG and WPF called on the FTC to take the following actions:

  • Compel companies involved in real-time online tracking and auction bidding to provide an opt-in for consumer participation in such systems.
  • Require that these companies change their privacy policies and practices to acknowledge that their tracking and real-time auctioning of users involve personally identifiable information.
  • Ensure that consumers receive fair financial compensation for the use of their data.
  • Prepare a report for the public and Congress within six months that informs consumers and policymakers about the privacy risks and consumer protection issues involved with the real-time tracking, data profiling, and auctioning of consumer profiles.
  • Address the implications of potential information “redlining” of consumers, with companies deciding not to provide editorial content based on an assessment of the marketing value of a particular online consumer’s behavioral data.

The group’s FTC filing is available at http://democraticmedia.org/real-time-targeting.

CDD is a nonprofit group working to educate the public about the impact of digital marketing on public health, consumer protection, and privacy. It has played a leading role at the FTC and in Congress to help promote the development of legal safeguards for behavioral targeting and other online data collection practices. U.S. PIRG serves as the federation of non-profit, non-partisan state Public Interest Research Groups. PIRGs are public interest advocacy organizations that take on powerful interests on behalf of their members. For twenty years, U.S. PIRG has been concerned with privacy and compliance by governments and commercial firms with Fair Information Practices. The World Privacy Forum is a nonprofit, non-partisan public interest research group. The organization is focused on conducting in-depth research, analysis, and consumer education in the area of privacy. It is the only privacy-focused public interest research group conducting independent, longitudinal work. World Privacy Forum reports have documented important new areas, including medical identity theft. Areas of focus for the World Privacy Forum include health care, technology, and the financial sector.

For Immediate Release
Contact: Jeff Chester (202-494-7100)
April 8, 2010
jeff@democraticmedia.org
Center for Digital Democracy
www.democraticmedia.org


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4 Comments

  1. The full complaint - bit.ly/9fvs7o - is a good read and excellent summary of company definitions of RTB, auctions, targeting, as well as a handy compendium of all their marketing materials. Plus you get a nice bibliography at no extra charge!

    What the one-man online advertising wrecking crew behind the complaint has missed, in my opinion, is facts sufficient to support the claims of unfair and deceptive practices or substantial harm to consumers.

    Thanks to a complicit and equally blind press, we'll see many headlines in days to come about the death of privacy. The current zeal in DC to regulate and tax everything to death makes this a significant threat to a $23 billion business. It's a good time to get up close and personal with your elected representatives and let them know that their support of efforts to regulate online advertising will mean a loss of your vote.

    Reply
  2. Andrew

    I think that the bottom line is that the consumer needs to have the reassurance that their privacy will be protected, otherwise brands will remain afraid to really move their money into data targeting. The industry is still seeking to unlock the branding dollars online. And conspicuous acceptance of data targeting by the consumer could work to alleviate that concern and unlock the branding budgets for data.

    I think the data issues it will boil down to are:

    1) The marriage of offline and online data for targeting (remember this: http://www.ftc.gov/os/closings/staff/doubleclick.pdf )

    2) The buying and selling of data over data exchanges

    Standards need to be defined and the consumer needs to see the value of surrendering some of their privacy in exchange for some value in return. Right now, for the most part they are not really aware what is occurring with the data of their online movements, nor how offline data is being used to help target online. I think that the industry as a whole should confront the issue head on.

    Effective self-regulation (in the consumers eyes) which protects their privacy and puts standards around data could be the best thing to happen to the industry -- because with trusted standards brands can more comfortably move their dollars online.

    Don't get me wrong I think that they're going way overboard on the FTC complaint, but i do think that it is an issue that needs to be addressed. It is not going away. Better to self regulate than leave up to the feds.

    Reply
  3. I think it's perfectly normal for people to feel concerned about their privacy - practitioners in this area just need to be a little more transparent about what's going on and most people will be fine with it once they understand.

    As for consumers getting compensated for their data - they're already compensated in the form of free content.

    Reply

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