Consumers should have 'do not track' option for behavioural ads, says US regulator

The feature, which the FTC said could be located within browsers, would stop a person being exposed to behavioural advertising and would function like 'do not call' lists of phone numbers that must not receive marketing calls.

Industry measures have failed to protect users well enough and regulators must now step in to ensure that businesses do not violate citizens' rights to privacy, an FTC report (122-page / 3.1MB PDF) has said.

"Despite some good actors, self-regulation of privacy has not worked adequately and is not working adequately for American consumers," said FTC chairman Jon Leibowitz.

"We deserve far better from the companies we entrust our data to, and industry, as a whole, must do better. So the FTC will take action against companies that cross the line with consumer data and violate consumers’ privacy – especially when children and teens are involved."

"The FTC wants to help ensure that the growing, changing, thriving information marketplace is built on a framework that promotes privacy, transparency, business innovation and consumer choice. We believe that’s what most Americans want as well," said Leibowitz.

The report made a number of recommendations but the one which advertisers and content producers dependent on advertising are likely to focus on is the 'do not track' mechanism proposed in the report.

"The Commission recommends a simple, easy to use choice mechanism for consumers to opt out of the collection of information about their Internet behavior for targeted ads," said an FTC statement. "The most practical method would probably involve the placement of a persistent setting, similar to a cookie, on the consumer’s browser signaling the consumer’s choices about being tracked and receiving targeted ads."

Behavioural advertising is designed to serve ads to people based on assumptions about them made on the basis of their web use activity. Cookies track that activity and pass information to advertising companies and networks.

Behavioural advertising has become a worry for privacy activists who have lobbied for its curtailment or at least for companies to make it clear when it is occurring.

Trade body the Interactive Advertising Bureau and others have backed the placing of an icon on behavioural ads that links to more information about the tracking.

But Leibowitz said industry initiatives had been insufficient and that regulators must step in. He said that the issue was a fundamental one of transparency.

"Some might say, what’s the problem? If companies tell consumers what they're doing with their data, consumers can just avoid companies that have data practices they don’t like. But many companies are not disclosing their practices," he said. "And, even if companies do disclose them, they do so in long, incomprehensible privacy policies and user agreements that consumers don't read, let alone understand."

Leibowitz said that the FTC would be pursuing more privacy cases in the near future. He said that if industry does not improve its record he would seek new legislation on the issues.

The FTC report proposed three measures for companies to take to improve their performance on privacy issues. They should design privacy protections into services from the start; they should tell consumers in an understandable way what happens to information gathered about them; and should improve the clarity of privacy notices.