Markets Wired

The Federal Trade Commission told Congress today that while the Commission recognizes that consumers may benefit in certain ways from the practice of tracking consumers online to serve targeted advertising, the agency supports giving consumers a “Do Not Track” option because the practice is largely invisible to consumers, and they should have a simple, easy way to control it. The FTC proposes that Do Not Track would be a persistent setting on consumers’ Web browsers.

David Vladeck, Director of the FTC’s Bureau of Consumer Protection, told the House Committee on Energy and Commerce Subcommittee on Commerce, Trade and Consumer Protection that the practice of tracking consumers’ activities online to target advertising, known as behavioral advertising, holds value for consumers because it supports content and services on the Web and delivers more personalized ads. He noted, however, that more transparency and consumer control regarding the practice are needed.

The testimony describes the FTC’s efforts to protect consumer privacy for 40 years through law enforcement, education, and policy initiatives. It also provides highlights from the FTC staff’s new report on consumer privacy, released yesterday, and proposes a framework to promote privacy, transparency, business innovation, and consumer choice.

The testimony states that while some in the industry have taken steps to improve consumer control of behavioral advertising, industry efforts have largely fallen short. Given the limitations of existing mechanisms, “the Commission supports a more uniform and comprehensive consumer choice mechanism for online behavioral advertising,” sometimes referred to as “Do Not Track.”

The most practical way to do that “would likely involve placing a setting similar to a persistent cookie on a consumer’s browser, and conveying that setting to sites that the browser visits, to signal whether or not the consumer wants to be tracked or receive targeted advertisements,” according to the testimony.

The testimony states that such a mechanism could be accomplished through legislation or potentially through robust, enforceable self-regulation. “If Congress chooses to enact legislation, the Commission urges Congress to consider several issues,” including:

• It should not undermine the benefits online behavioral advertising provides consumers, including funding content and services;
• Unlike the FTC’s Do Not Call Registry for telemarketers, it should not require a registry of unique identifiers; rather, the Commission recommends a browser-based mechanism;
• It should consider an option that lets consumers choose to opt out completely or to choose certain types of advertising they wish to receive or data they are willing to have collected about them;
• The mechanism should be simple, and easy to find and use;
• The FTC should be given Administrative Procedures Act rulemaking and the ability to fine violators to “provide a strong incentive for companies to comply with any legal requirements, helping to deter future violations.”

The Commission vote approving the testimony and its inclusion in the formal record was 4-1, with Commissioner William E. Kovacic dissenting. Copies of the testimony can be found on the FTC’s website and as a link to this press release.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 1,800 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics.

(FTC File No. P095416)
(DNTTestimony.final)