FTC Proposes Self-Regulation Rules for Behavioral Ad Players

The Federal Trade Commission (FTC) today released five proposed guidelines for self-regulation in the behavioral advertising industry.

The guidelines document suggests a general framework for how Web sites and other stakeholders in the behavioral ad space should communicate with Web users, gather data about their online activities and treat that data once they’ve collected it. With the release, the FTC opened a two-month comment period, after which the FTC may release formal guidelines.

The first and perhaps the most glaring of the proposals aims to make data collection more transparent to consumers, of whom “few appear to understand the role that data collection plays” in subsidizing free content, the FTC says. The suggested rule also calls for an opt-out mechanism on all sites engaged in behavioral targeting.

According to the proposed guideline, “Every Web site where data is collected for behavioral advertising should provide a clear, concise, consumer-friendly, and prominent statement noting that (1) data about consumers’ activities online is being collected… and (2) consumers can choose whether or not to have their information collected for such purpose.”

The would-be rule also indicates such sites should provide “a clear, easy-to-use, and accessible method for exercising this option.”

Other principles include one requiring “reasonable security” of consumer data; one proposing companies keep data only long enough to fill a “legitimate business need;” and another insisting data collectors only gather sensitive data such as information on a consumer’s health or children’s activities if they’ve obtained express consent.

If the language seems exceedingly non-specific, there’s a reason, said Eileen Harrington, the FTC’s deputy director for consumer protection.

“We are proposing broad principles and self-regulation… precisely because of the rapidly changing and evolving nature of these practices, including the parties and the nature of the parties that participate in them,” Harrington told ClickZ News. “These principles are intended to be broad enough and flexible enough to encompass anyone who is operating in that space.”

Two additional guidelines cover the use of data tracking for purposes other than behavioral advertising, and notifying consumers of policy changes regarding the use of behavioral data.

The complete proposed guidelines document is available on the FTC’s Web site.

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