FTC Settles With Tremor Over Flash Cookies

  |  November 8, 2011   |  Comments

Video ad net's use of persistent cookies contradicted its own privacy policy, says FTC.

The Federal Trade Commission has settled with ScanScout over a charge related to the video ad network's use of Flash cookies.

According to a statement by the FTC, Tremor Video-owned ScanScout used Flash cookies to record and serve ads to users visiting sites on its network. Such cookies, technically known as Flash Local Shared Objects, cannot easily be eliminated from an individual's computer via the usual means of clearing browsing data.

By using them, the FTC says ScanScout made a liar out of its own privacy policy, which states, "You can opt out of receiving a cookie by changing your browser settings to prevent the receipt of cookies." According to the agency, that amounted to a deceptive marketing claim and thus put the company in violation of the FTC Act.

Under the settlement, ScanScout and Tremor are barred from misrepresenting data practices, including the collection, use, sharing, and disclosure of user data. Tremor has also placed a notice on its homepage at the FTC's behest, stating, "We collect information about your activities on certain websites to send you targeted ads. To opt out of our targeted advertisements, click here." The resulting opt out is required to last at least five years.

More significantly, Tremor must embed a similar notice and opt out link within or adjacent to its display ads. Whether one will also be required in the company's in-stream video ads is unclear. According to the FTC's statement, "the order requires the company to undertake reasonable efforts to develop and implement a hyperlink in its video ads and to report regularly to the FTC on its progress."

The settlement agreement imposes no monetary penalty on ScanScout/Tremor Video.

Tremor said in a statement, "Tremor Video respects the FTC’s process and is complying with industry best practices as the company continues to define new standards for consumer transparency and control as they relate to in-stream video."

Flash cookies have been around for six years or more, but have recently attracted heightened interest from U.S. and European privacy advocates and lawmakers. Individual lawsuits regarding their use have been aimed at companies like Specific Media, Quantcast, NBC Universal, and others. Many of those suits have been settled in recent months.

Earlier this year, Adobe modified its Flash plug-in to allow consumers to more easily disable Flash cookies within the browser.

Midway through the FTC's investigation of ScanScout, the ad tech firm was acquired by Tremor Media, which has since changed its name to Tremor Video.

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ABOUT THE AUTHOR

Zachary Rodgers

Until March 2012, Zach Rodgers was managing editor of ClickZ's award-winning coverage of news and trends in digital marketing. He reported on the rise of web companies, data markets, ad technologies, and government Internet policy, among other subjects. 

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