FTC issues principles for self-regulation

The FTC issued a report on its investigation of online behavioral advertising, and laid out a set of guidelines on how the industry collects personal information. The report looks into “behavioral advertising,” which tracks online activities of an individual for the purpose of delivering relevant, contextual advertisements.

The FTC has a set of principles that encourages the industry to self-regulate. The report, titled “Self-regulatory principles for online behavioral advertising”, responds to several issues that came up in public discussion of an earlier “Behavioral Advertising Town Hall”.

The report notes that behavioral advertising isn’t all bad, and in fact, it forms the basis of almost all of the free online content that exists on the Internet today. There is a risk however, that the information being collected could fall into the wrong hands, or be misused in many different ways. The FTC “seeks to balance the potential benefits of behavioral advertising against the privacy concerns it raises, and to encourage privacy protections while maintaining a competitive marketplace.”

The bottom line message from the FTC though, seems to be to give a direct message to advertisers: get on the stick and regulate yourselves, or we’ll do it for you.

Behavioral advertising isn’t all spam though. The issue is how the data being collected is used, and certainly, personal data does get sold to spammers all the time. In general, the FTC document acknowledges that the self-regulation doesn’t need to apply to everybody, and that there are fewer concerns about first party and contextual advertising. First party advertising is when a web site collects information about consumers, but doesn’t share that information with any third parties. Contextual advertising is like what Google creates–advertisements that are delivered on-the-fly to match the general content of the web site being viewed.

There are four principles laid out in the report, including transparency and consumer control. This means that consumers have to have an easily accessible way to opt out of having their information collected. This is a strong and bold move in helping to eliminate the spam problem. Far too many web operators hide the opt-in/opt-out information, making it very difficult to find–and as a result, visitors don’t know how to opt out, or may not even know that they have opted in. Making the opt-out more prominent is a good move; let’s hope the industry responds to it.

The report also encourages companites to provide security for the data they do collect, and retain it only for as long as needed. Further, the report encourages web site operators to “obtain affirmative express consent” before collecting any such data.

It will be a wonderful day for the anti-spam world if the industry complies with the FTC principles. Behavioral advertising, though not “evil” in and of itself, is largely invisible. Many users are never aware that their personal information–which may even include email addresses and other types of personal data–are being collected.