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Has the Behavioral Advertising industry misled consumers?

Behavioral advertising industry... you have a problem. A BIG problem.

  • Consumer reports just released a major consumer poll that shows that the vast majority of American consumers are unaware of how the behavioral advertising industry invades their privacy and that American consumers overwhelmingly want more personal control over their privacy online.  

The BIG problem the behavioral advertising industry has is that the consumer evidence strongly suggests that the industry has not respected anti-fraud consumer protection laws that require fair representation.

  • Specifically, the industry has not fairly represented that they are invading individuals' privacy in ways most Americans do not approve of.  
  • Simply, the behavioral advertising industry finds itself squarely on the wrong side of the American consumer, as the public and Washington focus attention on the serious Internet privacy problem of Unauthorized Tracking. 

Consider the stark poll results of the widely respected and independent Consumer Reports:     

  • “Americans are clearly concerned with how their personal information is being collected and used by internet companies,” said Joel Kelsey, policy analyst with Consumers Union. “The vast majority of consumers want more control over their personal information online and want the ability to stop internet companies from tracking and profiling them.”
  • "...72 percent are concerned that their online behaviors were being tracked and profiled by companies."
  • "The poll revealed that 93 percent of Americans think internet companies should always ask for permission before using personal information and 72 percent want the right to opt out when companies track their online behavior."

So how is this unfair representation or consumer fraud?

  • Per the Federal Trade Commission, the lead consumer protection agency responsibilities
    •  "The basic consumer protection statute enforced by the Commission is Section 5(a) of the FTC Act, which provides that "unfair or deceptive acts or practices in or affecting commerce...are...declared unlawful." (15 U.S.C. Sec. 45(a)(1))."
    • "Unfair" practices are defined as those that "cause[] or [are] likely to cause substantial injury to consumers which is not reasonably avoidable by consumers themselves and not outweighed by countervailing benefits to consumers or to competition" (15 U.S.C. Sec. 45(n)).

Given the Consumer Report findings above that 93% of Americans expect to be asked for permission and 72% want to opt out... it appears that consumers don't believe they can avoid the potential "serious injury" of identity theft and consumer fraud due to abuse of private information.

Other findings in the Consumer Reports poll strongly suggest how bad a job the behavioral advertising industry has done in being forthright with the American consumer:  

  • 61% are confident that what they do online is private and not shared without their permission;
  • 57% incorrectly believe that companies must identify themselves and indicate why they are collecting data and whether they intend to share it with other organizations;
  • 48% incorrectly believe their consent is required for companies to use the personal information they collect from online activities;
  • 43% incorrectly believe a court order is required to monitor activities online.

The stakes are very high for the behavioral advertising industry as explained in a Washington Post article:

  • "If Congress required 'opt in' today, Congress would be back in tomorrow writing an Internet bailout bill," said Mike Zaneis, vice president of public policy for the Interactive Advertising Bureau, a trade group. "Every advertising platform and business model would be put at risk."

Bottom line: Apparently, the viability and solvency of the Internet behavioral advertising industry and business model depends on Congress refusing to protect consumer's clear expectation of privacy.

  • As I started this post -- the behavioral advertising industry has a BIG problem. 
  • Their business model apparently depends on being able to mislead consumers about how their private information is used, and it also depends on Congress and the FTC letting them continue to get away with it -- indefinitely.