Thursday, Jul 29, 2010    Text size: 

One of the most pressing hot-button topics contemplated by the nation's regulators today, the issue of consumer privacy in the digital age is being tackled in Washington and elsewhere as legislators attempt to play catch up with advancements in Internet marketing techniques — such as behavioral and location-based advertising and the tracking systems that enable it.

Earlier this week, the Federal Trade Commission testified before the U.S. Senate Committee on Commerce, Science, and Transportation regarding its mission to protect consumer privacy. During his testimony, FTC Chairman Jon Leibowitz detailed the Commission's consumer privacy program and how it is pursuing data security, identity theft, children's privacy — and protecting consumers from intrusive spam, spyware, and telemarketing.

Leibowitz' testimony described the Commission's focus on online consumer privacy, stating that it requires renewed scrutiny in light of new technologies and business models. This included a series of public roundtable discussions held recently concerning privacy and business practices — along with methods of "simplifying consumer choices about commercial data practices, and increasing transparency of those practices."

"One of the things that became absolutely clear to us during our roundtables this year is that there's a huge disconnect between what consumers think happens to their data and what really happens to their data," Leibowitz said. "Most consumers believe that a privacy policy protects their privacy. Instead, a privacy policy delineates their rights and their lack thereof."

As a solution to privacy concerns over data collection for advertising, or other online activity tracking practices, FTC is considering the establishment of a "Do Not Track" registry — similar to its successful "Do Not Call" registry.

"To this end, one idea we may explore in the context of behavioral advertising is a do-not-track mechanism that's more comprehensive and easier to use than the procedures currently available," Leibowitz stated. "Under such a mechanism, users could opt out of behavioral advertising more easily rather than having to make choices on website-by-website basis."

According to the FTC, its Do Not Call Registry is one of the most successful and popular consumer privacy initiatives, having reached the 200 million mark in registered numbers this month, with 64 actions against violators resulting in $40 million in fines.

While some websites and advertising networks allow consumers to opt-out of any tracking systems, the FTC goal is a simple switch that controls tracking consent across the entire Internet. Implemented as a toolbar or web browser plugin initially and as a default feature set eventually on all Internet access devices (think V-Chip for computers), such a system may provide enhanced privacy protection — but at what cost?

Such moves would disrupt most current affiliate marketing schemes, advertising and traffic sales, traffic trading, and many other forms of ecommerce that rely on following a visitor from acquisition to the checkout counter — including next-generation contextual content management systems that deliver information based upon a prospect's behavior, even across multiple websites.

The Commission plans to release a report on this initiative later this year — and is seeking Congressional help with improving consumer privacy, so Internet marketers can be certain that this is only the beginning of a discussion with far-reaching implications — but the time to act is now.

"It's really in the hands of the private sector," Leibowitz said. "If they want to do a better job of ... giving clear choices and have clearer notice, then I think it's in their hands to avoid legislation. I think if they don't, and if we don't see more progress, I think you're going to see probably in the next Congress a fair amount of interest in moving legislation forward to have more prescriptive rules."