DoubleClick Discloses New York State Inquiry

Online advertising leader DoubleClick is the subject of an informal inquiry by the New York State Attorney General‘s office, in addition to the Federal Trade Commission inquiry that the company disclosed in Securities and Exchange Commission documents earlier this week.

Both inquiries are seeking information about DoubleClick’s privacy practices, for which it has come under fire from consumer advocacy groups. DoubleClick’s headquarters are located in New York.

Trading in DoubleClick’s (DCLK) stock was halted yesterday to give the company a chance to disseminate the news. The company’s stock dropped $11.50 this morning after trading began.

“We are confident that our business policies are consistent with our privacy statement and beneficial to consumers and advertisers. The FTC has begun a series of inquiries into some of the most well-known web companies, including DoubleClick, and we support their efforts to keep the Internet safe for consumers,” says Kevin Ryan, president of DoubleClick.

“DoubleClick has never and will never use sensitive online data in our profiles, and it is DoubleClick’s policy to only merge personally identifiable information with non-personally identifiable information for profiling, after providing clear notice and choice.”

The Federal Trade Commission is looking into Amazon.com‘s privacy practices, and EToys is being investigated for the way it markets to children.

The New York State Attorney General’s office confirms the state level probe, first acknowledged by DoubleClick in a press release yesterday, and says the company is cooperating with the inquiry. The Attorney General’s office will first gather information about the company’s privacy practices, and then decide whether to initiate a more formal investigation.

“We are just in the information gathering stage. DoubleClick voluntarily is providing us with information,” said Juanita Scarlett, a spokesperson for NY AG Eliot Spitzer.

“We have no formal investigation. In New York, we have an entire department dedicated to looking at Internet issues, privacy, consumer issues, everything involving e-commerce. As consumers approach us with their concerns we certainly and proactively take a look at e-commerce.”

The New York Attorney General’s office has, for a couple of months, taken a big interest in e-commerce and online privacy issues. Attorney General Eliot Spitzer has called for legislation, “to establish baseline statutory personal privacy protections.”

“We used to fear the collection and retention of information by the government, and so we passed laws limiting the ability of government to gather information about us,” said Spitzer, speaking to the New York State Bar Association on January 28.

“In fact, today the source of the most troublesome privacy invasions is not government, but certain commercial interests that exchange confidential information as a commodity. In this regard, the problem is not Big Brother, but Big Browser.”

Spitzer appears to be most concerned about companies that share consumers’ personal information with third parties, and those that don’t allow consumers to opt-out.

Earlier this week, DoubleClick started a public information campaign to inform people about privacy, and to allow them to opt-out of DoubleClick’s database, setting up a Web site called PrivacyChoices.

The advertising company is also facing six lawsuits that allege it unlawfully collects personal information about Internet users.

The pressure on DoubleClick with regard to its privacy practices began to mount after its acquisition of Abacus Direct, which possesses databases of offline consumer information. DoubleClick recently began matching that data with online customer information.

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