Groups urge FTC probe of new ad practices

A group of public interest groups Thursday urged the FTC to investigate two emerging trends in online advertising that critics say pose growing threats to consumer privacy.

At issue is the auction of individual Internet users for targeted advertising opportunities and the combination of online and other sources of data about Internet users.

"This massive and stealth data collection apparatus threatens user privacy. It also robs individual users of the ability to reap the financial benefits of their own data," said the complaint, which was filed Thursday with the FTC by Center for Digital Democracy, U.S. Public Interest Research Group, and the World Privacy Forum.

The complaint describes a growing trend in online behavioral advertising that involves the real-time sale and trade of the right to target individual users with online ads through the use of data compiled about such users via their Web surfing habits.

The complaint also alleges that firms are engaging in an expanding trade of selling outside sources of data about users, combined with the information gathered about users online.

The groups have asked the FTC to investigate the data and advertising exchanges operated by Google, Microsoft and Yahoo, as well as several firms that support the auctioning and data collection/targeting system, including AppNexus, BlueKai and Rubicon Project.

Other firms mentioned in the complaint include eXelate, MediaMath, PubMatic, TARGUSInfo and Rocket Fuel. For example, AppNexus offers a real-time online ad platform and touts that it is founded and managed by the "pioneers" of Yahoo's and Google's Double Click ad exchanges.

The complaint quotes media reports that outline how firms like AppNexus use information from data providers like BlueKai or eXelate.

"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."

The firms have asked the FTC to require those firms involved in real-time online tracking and auction bidding to allow consumers to opt-in to participate in such activities; require firms to update their privacy policies so consumers are aware of these activities; and "ensure" consumers are compensated for the use of their data.

The groups also have called on the FTC to conduct a report within six months about the privacy risks and consumer protection issues related to "the real-time tracking, data profiling and auctioning of consumer profiles."

Center for Digital Democracy Executive Director Jeff Chester said in a statement the FTC has not done enough to crack down on the burgeoning behavioral advertising industry, saying the commission's "inaction has encouraged the data collection and ad targeting industry to expand the use of consumer information for personalized advertising."

The FTC has held a series of privacy roundtables but not taken any specific regulatory actions to rein in the industry.

Google allows users to opt-out of having a cookie track their preferences for the use of advertising. Yahoo offers a similar opt-out provision on its site, and both firms tout their membership in the Network Advertising Initiative, which aims to increase consumer awareness about online behavioral advertising and establish "responsible business and data management practices and standards."