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The Office of Fair Trading believes the online behavioural advertising industry is quite able to regulate itself, despite some concerns about user profiling and adaptive pricing based on postcodes.

It said the Internet Advertising Bureau's approach to self-regulation goes some way to dealing with consumer concerns, although the rules are less than a year old. It noted that behavioural advertising revenues are between £64m and £95m - a fraction of the £3.35bn total for online advertising in the UK.

To strengthen self-regulation the OFT suggests more transparency about opting out, offering more detail on sensitive information collected and used to target advertising. It also suggests extending the voluntary code to social networking sites and strengthening the board which deals with complaints by getting people from outside the industry to take part.

The OFT sees regulation as split with the Information Commissioner's Office. Together the two quangos will write a Memorandum of Understanding to decide who deals with which issues. It also believes that behavioural advertising is covered by Consumer Protection from Unfair Trading Regulations.

Phorm is a member of the IAB but it used deep packet inspection rather than cookies to profile users. The OFT notes that DPI is not currently in use in the UK.

The OFT's research revealed a mixed view of behavioural advertising from consumers. Forty per cent of consumers were neutral on the subject, 28 per cent disliked it and 24 per cent welcomed it.

The group does express some concerns that targeted pricing could harm consumers. Targeted pricing would identify individual shoppers, either by postcode or by past purchases, that are likely to put up with a higher price than an ordinary punter.

The OFT supports the ICO view that such information should be considered personal data and therefore regulated accordingly - with consent provisions and opt-out options.

It does not believe that any companies in the UK are currently increasing prices based on consumers' past behaviour.

The full report is available here. ®

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