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FTC gives behavioral ad punters one last chance

Voluntary self-regulation's final shot

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The US Federal Trade Commission told online advertisers to do a better job of self-regulating how they track people's activities - or the government will step in and do it for them.

The regulatory agency issued a report Thursday with minor tweaks about how online targeted ads systems should collect, save, store, and share user information. The industry remains self-regulated despite calls from privacy groups for legislation on how companies are allowed to collect and use the data.

FTC adherence to a Bush administration policy of voluntary policing of internet advertising may be nearing the end of its rope, however. Commissioner Jon Leibowitz called the freshly modified guidance the industry's "last clear chance" to show that self-regulation will effectively protect consumer privacy.

After considering public comments from a November 2007 Town Hall meeting, the FTC offered its four revised principles for online ad punters:

1. Web sites are expected to provide clear and prominent notice regarding behavioral advertising as well as an easily accessible way for consumers to opt-out.

The agency said that because privacy policies posted on companies' websites are often too long and difficult to understand, ad-tracking disclosure mechanisms should be made separate and meaningful to users.

2. Companies should provide reasonable security for any data they collect for behavioral advertising and only retain data as long as it's needed for legitimate business or law-enforcement needs.

The Commission said the protections should be based on the sensitivity of the data and the nature of a company's business.

3. Websites are urged to obtain the express consent of users before they make material, retroactive changes to their data-collection policies.

"It is fundamental FTC law and policy that companies must deliver on promises they make to consumers about how their information is collected, used, and shared," the report states. "An important corollary is that a company cannot use data in a manner that is materially different from promises the company made when it collected the data without first obtaining the consumer's consent."

4. Companies should receive express consent for use of "sensitive data."

Although the Commission didn't offer a definition of "sensitive data," it did say that the clearest examples are items such as financial data, data about children, health information, and geographic-location information. The FTC added that it encourages industry, consumer, and privacy advocates to develop more-specific standards to address the issue.

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