Three Groups Urge FTC to Investigate “Wild West” of Online Data Collection

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U.S. PIRG, CDD and World Privacy Forum Call on Federal Trade Commission to Investigate Real-time Advertising Auctions and Data Exchanges of Personal Data

U.S. PIRG Education Fund

WASHINGTON, April 7 – Three consumer protection organizations on Thursday filed a complaint with the Federal Trade Commission (FTC), demanding the commission investigate growing privacy threats in the “Wild West” online.

The U.S. Public Interest Research Group, the Center for Digital Democracy 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. (Click here to download a 32-page PDF of the filing.)

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.

“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 the 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.”

“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.”

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.

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U.S. PIRG, the federation of state Public Interest Research Groups, is a non-profit, non-partisan public interest advocacy organization.

For more information on U.S. PIRG’s Internet Freedom campaign, click here. Read Ed Mierzwinski’s U.S. PIRG Consumer Blog and sign up for the RSS feed.


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