FTC wants new powers over Web profilers

FTC Chairman Jon Leibowitz said self-regulation in the marketplace is insufficient. Manuel Balce Ceneta/AP

The Federal Trade Commission on Monday called on Congress to pass legislation that would empower the regulatory agency to punish advertising companies that secretly traffic in personal data.

The Obama administration and lawmakers have grown increasingly concerned about data brokers that invasively procure information about individuals -- income levels, shopping habits and medical-related search terms -- through Web-tracking to target advertising. FTC Chairman Jon Leibowitz on Monday said self-regulation in the marketplace is insufficient.

He threw strong support behind legislation to rein in the data broker industry and simultaneously released a commission report that also requested Congress require companies to show an Internet user exactly what information they know about that individual.

The recommendations finalize guidance that FTC staff drafted in December 2010 and add clear language advocating data seller regulations.

But Leibowitz refrained from recommending Congress mandate "do-not-track" mechanisms, saying industry seems committed to embedding tools on Web browsers that stop companies from using surfing stats for customized advertising. In February, a business consortium including e-tailers and online giants such as Google and Verizon agreed to implement anti-tracking buttons that would, among other things, prevent companies from collecting data for employment and health treatment purposes.

"We are supportive of the do-not-track policy ecosystem that is moving this process forward," Leibowitz said. "I'm very hopeful that do-not-track can be done without legislation."

Leibowitz added, however, that "more work needs to be done" to execute do not track and his staff will continue organizing meetings with online businesses to finish the job. Do not track, for example, must mean, in practice, "do not collect" information and "do not advertise back," he said. "We need to have a do-not-track option that is persistent, that's easy to use and that's effective."

In 2011, Sens. John Kerry, D-Mass., and John McCain, R-Ariz., introduced legislation that would authorize FTC to enforce new requirements for data brokers. While stopping short of endorsing a specific bill, Leibowitz said he backed the ideas of that measure, such as mandating that data collectors expressly state the types of information they are accumulating and why, as well as allow Internet users to correct inaccurate data.

FTC staff in the coming months plan to meet with mobile app developers and other technology firms outside the advertising arena to discuss privacy reforms. Regulators will hold a workshop on May 30 to explore means of displaying brief, useful privacy disclosures on small screens. In the second half of 2012, agency personnel expect to discuss their concerns with Internet service providers, operating systems and social media networks that are systematically tracking computer users' activities.

The trade group representing Web services companies rejected the report's call for new privacy legislation. The Software and Information Industry Association "has long supported a collaborative, public-private approach as the best way to ensure consumer privacy, and we cannot endorse the report's call for new legislation. In light of the FTC's substantial authority in this area, we do not believe there is a need for new privacy legislation," SIIA President Ken Wasch said in a statement.