Will your advertising and marketing strategies be impacted by what the FTC is proposing? Chances are they will be in one way or another. Here’s the gist of what they are proposing…
In my last post, I discussed the background and reasoning for the Federal Trade Commission’s new report released on December 1st. The report titled; Protecting Consumer Privacy in an Era of Rapid Change: A Proposed Framework for Businesses and Policymakers, is meant to guide businesses as they develop “best practices” and to guide Congress as it develops legislation on privacy issues.
The release of the report was followed by Congressional hearings on the subject during the same week. The proposed framework addresses the fact that we live in an age when extensive amounts of consumer information are being collected from many online and offline sources. Much, if not all, of the information is collected unbeknownst to the consumer.
The data collected from one source is then shared and combined with data from other sources. Data brokers analyze and segment it and share the resulting consumer information with advertising networks.
All this leads to very specific demographic and behavioral targeting to achieve better advertising results. While advertising professionals think that better targeting is beneficial to consumers, privacy advocates are very concerned about what is collected, and how it might be used by other parties.
There are active efforts among reputable organizations, such as those taking place through the Interactive Advertising Bureau (IAB), to self regulate and protect the privacy of consumer information. The FTC is concerned that those efforts are not working because there are many organizations that simply will not abide by self regulation.
Links to my previous posts about the efforts of advertising trade organizations to self regulate can be found in my last post.
The framework proposed by the FTC would apply broadly to online and offline commercial organizations that collect, maintain, share, or otherwise use consumer data that can reasonably be linked to a specific consumer, computer or device. It advocates three main approaches:
- Data Security & Accuracy
- Consumer Choice (Do Not Track)
- Improved Transparency
Data Security & Accuracy: The first approach is to get companies to build privacy protections into their everyday business practices. Such protections include providing reasonable security for consumer data, collecting only data needed for specific business purposes, retaining the data only as long as necessary to fulfill that purpose, safely disposing of data no longer required and implementing reasonable approaches to promote data accuracy.
Companies would also implement and enforce privacy practices throughout their organization. The report also states the required response should be “proportional”. Companies that collect and use small amounts of non-sensitive information need not devote the same level of resources as companies that collect vast amounts of data, collect sensitive information or sell consumer data.
Consumer Choice (Do Not Track): The second approach is to provide choices to consumers about data collection and use in a more straight-forward way. It would exclude consumer choice for “commonly accepted” data practices to concentrate on practices that are of much greater concern. By clarifying these “commonly accepted” data practices for which consumer consent is unnecessary, organizations will be able to simplify their interactions with consumers, reducing the burden and confusion on consumers and businesses alike.
For data practices that are not “commonly accepted” consumers should be able to make informed and meaningful choices. FTC staff advocates that options be clearly and concisely described and offered in “context” of when the consumer is making a decision about his or her data. This could entail a “just-in-time” approach in which organizations provide the consumer a choice at the time the consumer enters personal data or before he or she accepts a product or service.
The FTC report advocates a uniform way of providing such a choice, perhaps similar in approach to a process now being implemented for behavioral advertising. Advertising trade groups associated with the Interactive Advertising Bureau are in the process of implementing a universal icon as a way for consumers to choose whether or not to allow the collection and use of data regarding their online behaviors, including websites visited, content viewed, etc.
One method mentioned in the report to implement universal consumer choice is to place a general setting on all browsers that would signal the consumer’s choices about being tracked and receiving targeted advertising. This browser approach is referred to as “Do Not Track.”
Improved Transparency: The report proposes a number of measures to make data practices more transparent to consumers. They include making privacy policies clear, concise and easy to read. Privacy policies should be written in a way that makes it easy to compare data practices across organizations.
The FTC also seeks to provide consumers with reasonable access to the data that companies maintain about them, particularly for third parties that do not interact with them. The FTC staff believes that the extent of access be proportional to the sensitivity of the data and its intended use.
Retroactive changes in data policies should be accompanied by robust notice to consumers and an affirmative consent for any changes to the collection or use of their data.
Finally, the FTC urges stakeholders to undertake a broad effort to educate consumers about commercial data practices and the options available to them.
The Commission is seeking comments on the proposals until January 31, 2011. It hopes to work with other agencies, policymakers, industry, and consumer groups to refine and implement the recommendations.
It should be noted that the Department of Commerce is preparing its own report on this subject. It will also require Congressional legislation to implement all of the policy changes proposed by the FTC. While it appears that lawmakers support stricter safeguards for consumer privacy, the exact mechanism of how it would work is a long way from being decided.
During Congressional hearings this month about the report, Republicans were cautious about stricter privacy measures. Based on their comments during the hearings and the new Republican majority in the house, it’s likely that requiring the “do not track” approach will not pass muster in the House.
I expect the emphasis will be on providing greater transparency and data security rather than requiring consumer choice in any consumer privacy legislation coming out of the next Congress.
What do you think?
Post Script:
Microsoft made the following announcement on December 7th:
“Recently, policy makers in Washington, D.C., Brussels and around the world have discussed how companies collect, use and store information from people browsing online. With the development of Internet Explorer 9, Microsoft is introducing a new feature, "Tracking Protection," to help consumers be in control of potential online tracking as they move around the Web.” Here’s the story from Microsoft:
Microsoft said the company was applying the principles outlined in the FTC’s report, including the idea that companies should build privacy features into their products.
Internet Explorer 9 does this by enabling consumers to indicate what websites with which they’d prefer to not exchange information. Consumers do this by adding “Tracking Protection Lists” to Internet Explorer. By default, there are no lists included in IE9.
Sounds a lot like “Do Not Track.” The difference is that consumers must enter their own “Tracking Protection Lists" to Internet Explorer. It makes preventing online tracking a little more work for consumers then the proposal by the FTC.
Anyone, and any organization, on the Web can author and publish Tracking Protection Lists. Consumers can install more than one. Expect privacy organizations to jump in and create these lists for consumers.
Whether they use them is another story. I expect those most concerned about the privacy of their online surfing habits to take advantage of this feature. I suspect that most Internet users will continue to go about their online business without worrying about whether their online behaviors are being tracked. It should be noted that many Internet users appreciate seeing advertising targeted to their interests as a result of such behavioral targeting efforts.
The Federal Trade Commission’s Chairman praised Microsoft’s announcement. The announcement has also made “privacy” a competitive issue and I would expect to see other browser applications implement their own approach to “Do Not Tract.”
Internet Explorer 9 is slated to be available next year.
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