a. Self-Regulation:
- Read pages 5-6 and 12-18 of the Internet Advertising Bureau’s principles of self-regulation here. "The Interactive Advertising Bureau (IAB) is comprised of more than 500 leading media and technology companies that are responsible for selling 86% of online advertising in the United States. On behalf of its members, the IAB is dedicated to the growth of the interactive advertising marketplace, of interactive’s share of total marketing spend, and of its members’ share of total marketing spend." What do you think of the IAB’s principles and enforcement mechanisms?
- Would it change your opinion about the prospects for and sustainability of self-regulation if you knew that these self-regulation mechanisms were put in place only after the FTC proposed them to the industry in 2007? Though the FTC (and therefore the Internet Advertising Bureau and the Digital Advertising Alliance) has continuously revised these principles with the changing times, the Agency argues that industry self-regulation is not providing sufficient protection of internet user privacy. In a 2012 report, the FTC called on Congress to enact privacy legislation related to online behavioral advertising. Do you think the FTC is being too harsh on the behavioral advertising industry? Is self-regulation a realistic way to deal with online behavioral advertising?
b. Federal vs. state jurisdiction over online profiling issues:
- Should this be a federally regulated issue at all? Read this.
- Should states regulate online profiling? California enacted a statute requiring websites to disclose more information about how they track users. Read the statute and this article discussing the "winners" and "losers" of the new statute. Do you think the statute will be effective in promoting online privacy in California? How might it affect the rest of the US?
c. The role of the FTC in regulating online behavioral advertising:
- The asserted basis for FTC jurisdiction over the regulation of privacy (and tracking related to online behavioral advertising) is Section 5 of the FTC Act, which was enacted in 1914. According to Section 5 of the Act, it is the FTC’s role to regulate and enforce the prohibition of “unfair and deceptive acts and practices in or affecting commerce.” The Electronic Privacy Information Center (EPIC) explains how Section 5 gives the FTC jurisdiction over privacy in some cases, and also explains the limits to the Agency’s authority in that regard. Read EPIC’s explanation of the role of the FTC in the regulation of online behavioral advertising here.
- We are skipping over a discussion of significant case law and legislation that has an effect on the FTC’s jurisdiction and enforcement capabilities. With that caveat in mind, does it strike you that the FTC’s mandate of avoiding unfair and deceptive trade practices should give the agency the authority to set the standard for what online profiling is appropriate and what is not?
- In 2010, the FTC proposed a universal “do not track” mechanism (in the form of a browser setting) that would ask internet users whether they wanted to authorize tracking for targeted advertising. Only if the users themselves authorized the tracking would the companies engaged in online behavioral advertising have the legal right to go about their business as to those particular users. The mechanism would signal to websites whether the user has chosen to receive targeted ads and would allow the FTC to impose penalties if the websites failed to comply with the users’ preferences. What do you think of this proposal?
- In 2011, The FTC settled its first major behavioral advertising case against a company called Chitika, Inc. To understand what Chitika did to incur the FTC’s wrath, read the FTC press release here.
- Do you think that the FTC’s jurisdiction over deceptive trade practices reasonably applies to Chitika’s opt-out mechanism?
- What do you think of the terms of the final order as explained in the press release?
- Later in 2011, the FTC reached a settlement with Facebook after filing a complaint alleging that the company was repeatedly breaking promises to users regarding the privacy of their information. Read the FTC’s press release explaining the complaint and the settlement here.
- The settlement has, of course, had ongoing repercussions to Facebook. Read this article discussing whether the recent privacy setting changes on Facebook were in violation of the settlement agreement from 2011.
- What do you think of these settlements? Are they an effective way to encourage increased privacy? Would you rather the FTC have the authority to file complaints about violations of affirmative privacy requirements in addition to “deception” related self-imposed privacy policies?
d. The role of Congress in regulating online behavioral advertising:
- Listen to Senators Rockefeller, Toomey, and then-senator John Kerry at a hearing for the U.S. Senate Committee on Commerce, Science, and Transportation as they discuss privacy legislation for online data collection and profiling. Watch the hearing from 21:35 to 39:07 here.
- What do you think of the Senators’ arguments and points of view? Whose interests are they representing?
- Do you agree with any of the three Senators about whether or not to enact legislative fixes to privacy issues related to profiling or whether or not to increase FTC authority?
- It is worth noting that there were several proposals in the 112th Congress regarding increased privacy settings in relation to online behavioral advertising, but none of them were enacted. For instance, the "Do Not Track Me Online Act of 2011" went along with the FTC’s proposal discussed above, and would require companies to adopt a “do not track” option as a browser setting. Optional: Read this article about the Bill.