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EC forms industry body to probe behavioural ad issues

Consumer commissioner fed up with web snooping chicanery

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The European Commission has formed a new group in an attempt to regulate companies' growing gathering and use of customers' personal data. The group has been formed to address problems the Commission says are eroding consumer trust.

Online retail is increasingly dependent on information on users' browsing habits and demographic information gathered from them. Consumer Commissioner Meglena Kuneva has created a new industry body that she wants to address the privacy and consumer protection problems faced by the users of online retail services.

"10% of European advertisers used [behavioural targeting] in 2007," she said in a speech last week. "Only one year later, it had already reached 28%. And almost 60% of advertisers said they wanted to use it this year."

"This development has an increasingly significant impact on consumers, who are genuinely concerned about the use of their private data. Our research shows that even the most confident internet users, who are usually those aged between 15 and 25, are convinced that their personal data is being used without their knowledge," she said.

"If cloud computing and location-based services become pervasive – as they seem destined to be – the sources and amount of data collected and stored in remote places will multiply. We must therefore ensure that consumers are properly protected in this ever-changing environment," said Kuneva.

She has created the Stakeholder Forum on Fair Data Collection, a collection of businesses who will have to outline their plans for protecting consumers' information.

"The time has also come to continue with our discussions in a more structured way," said Kuneva. "In this forum, publishers, advertisers, ad-networks, and other business representatives will shortly be invited to outline their plans and to address pertinent issues with the European Commission and other key stakeholders, such as consumer organisations."

"This occasion will also allow us to jointly assess the perceived risks to consumers and consider how best to address them," she said.

The Forum is scheduled to meet three times next year, with the first meeting taking place in February. According to the Commission it will discuss the use of incomprehensible privacy policies; misleading and aggressive personal data collection methods; the breaking of existing rules on data collection; the best way to obtain informed consent for data collection; how to allow consumers to see what information is held on them; and whether or not consumers are told enough about the collection of data and use of it to profile them.

Behavioural advertising involves tracking somebody's internet use across a number of sites, attempting to divine from that information what adverts it would be most effective to show them and then showing them those ads.

It is already coming under increased scrutiny in the UK. Consumer protection regulator the Office of Fair Trading said last month that it will investigate whether behavioural advertising and the targeting of services at certain kinds of people – such as people living in certain areas but not others – breaks laws on consumer rights.

A group of MPs and Lords recently called for the outlawing of gathering the information necessary for behavioural advertising without an internet user's explicit consent.

Kuneva said that the Commission has been investigating the issues of behavioural targeting and unfair commercial practices, and that it has been attempting to change companies' behaviour.

"We followed up [round-table] meetings with bilateral talks with numerous stakeholders. We asked consumer organisations and privacy experts about their concerns; we asked businesses about the reliance on data of their business models; and we asked academics about probable future developments in the market," said Kuneva.

"We consulted internet publishers and advertisers, ad-networks and data solution providers, browser manufacturers, regulators and self-regulatory organisations – both in the EU and in the US," she said. "Most stakeholders would also agree on the need for readable privacy notices and terms and conditions which are free from unfair terms."

Kuneva said that consumers deserve to be told whenever an ad they are seeing is chosen because of monitoring of their browsing and should have easy access to the information on which that ad-serving is based.

"Stakeholders should agree on better consumer information when profiles are used. In essence, consumers should be informed that ads are based on their profile," she said. "I hope we can also agree on the need to give consumers access to the ad segments they are in, and the right to change them if they wish."

Copyright © 2009, OUT-LAW.com

OUT-LAW.COM is part of international law firm Pinsent Masons.

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