Consumer Groups Call for Federal Trade Commission (FTC) Investigation of Online Advertising and Consumer Tracking and Targeting Practices

Arizona PIRG

The Center for Digital Democracy (CDD) and the U.S. Public Interest Research Group (U.S. PIRG), two of the leading public-interest advocacy groups working on behalf of a more diverse and competitive online environment, filed a complaint today with the Federal Trade Commission calling on the commission to undertake an immediate, formal investigation of online advertising practices. As the groups make clear in their 50-page filing, the data collection and interactive marketing system that is shaping the entire U.S. electronic marketplace is being built to aggressively track Internet users wherever they go, creating data profiles used in ever-more sophisticated and personalized “one-to-one” targeting schemes.

“Unfortunately, over the last several years the FTC has largely ignored the critical developments of the electronic marketplace that have placed the privacy of every American at risk,” declared Jeff Chester, CDD executive director. “The FTC should long ago have sounded a very public alarm–and called for action–concerning the data collection practices stemming from such fields as Web analytics, online advertising networks, behavioral targeting, and rich ‘virtual reality’ media, all of which threaten the privacy of the U.S. public.”

Current privacy disclosure policies, CDD and US PIRG contend, are totally inadequate, failing to effectively inform users what data are being collected and how that information is subsequently used. While many companies claim they collect only “non-personally identifiable” information, they fail to acknowledge the tremendous amounts of data compiled and associated with each unique visitor who visits their website. Thus even if these companies don’t know the names and addresses of users, they literally know every move those users make online, through sophisticated online tracking and analysis technologies.

“The emergence of this on-line tracking and profiling system has snuck up on both consumers and policymakers and is much more than a privacy issue,” said U.S. PIRG Consumer Program Director Ed Mierzwinski. “Its effect has been to put enormous amounts of consumer information into the hands of sellers, leaving buyer-consumers at risk of unfair pricing schemes and with fewer choices than the Internet is touted to provide.”

It is therefore incumbent on the Federal Trade Commission, according to the CDD/PIRG complaint, to protect consumers from unfair and deceptive practices by using its authority under Section 5 of the FTC Act to address this issue on a variety of fronts:

• launching an immediate investigation into the online marketplace in light of this new environment

• exposing practices that compromise user privacy

• issuing the necessary injunctions to halt current practices that abuse consumers

• crafting policies—and recommending federal legislation—to prevent such abuses.

As a first step in this direction, the complaint urges the FTC to look closely at Microsoft’s new set of adCenter services, a wide-ranging data-collection and ad-targeting scheme that is deceptive and unfair to millions of users. Especially disturbing is Microsoft’s use of data gleaned from its Hotmail service (which attracts over 30 million users every month) to sharpen its ad-targeting efforts, and those of its adCenter clients.

“Microsoft, like Google and Yahoo, is actively rewriting the rules that govern the online marketplace,” explained Chester. “It is the FTC’s job to make certain that these rules reflect more than corporate self-interest. The public interest matters, too, and it is the FTC’s responsibility to protect and promote that vital perspective, by issuing injunctions against the most egregious of the new invasive advertising practices, which are fully described in our complaint.”