FTC urged to regulate Internet user 'tracking'

Updated at 2:29 p.m. PDT Thursday: Two public-interest groups are asking the U.S. government to target what they claim are "invasive" online marketing schemes--especially those involving social-networking Web sites or targeting children and teenagers.

In a lengthy new complaint expected to be filed Thursday with the Federal Trade Commission, the Center for Digital Democracy and the U.S. Public Interest Research Group (PIRG) say they're concerned that Internet users are more "vulnerable" than ever to increasingly sophisticated advertising techniques that depend on tracking and compartmentalizing people's behavior and preferences.

"The new business models of the Internet and mobile commerce can stimulate the economy and offer consumers choices," Ed Mierzwinski, PIRG's consumer program director said in a statement. "But unless the FTC steps in now and sets some basic rules for privacy protection, the costs to consumers posed by so-called behavioral targeting, the manipulation of both surfing and price choices, and the 24/7 corporate surveillance and dossier-building will easily outweigh any supposed benefits to consumers."

The complaint is timed to coincide with the FTC's online advertising workshop on Thursday and Friday in Washington, D.C.

The latest filing builds on a complaint filed by the same two groups around the same time last year. Singling out Microsoft's new-at-the-time advertising ventures, they had called on the FTC to review and potentially limit online business models dependent on technologies that "aggressively track us wherever we go, creating data profiles to be used in ever-more sophisticated and personalized 'one-to-one' targeting schemes." The latest filing also reiterates a call for Congress to pass new federal legislation.

Raising a fuss
The groups aren't alone in raising a fuss over emerging online-marketing approaches. Separately on Wednesday, a coalition of nine privacy and consumer groups launched a campaign urging the FTC to establish a "do-not-track" list designed to allow consumers to evade aggressive, targeted advertising messages. That proposal would require online advertisers that use "persistent tracking technologies" (such as cookies) to register domain names of all such servers with the FTC, so that consumers could set their browsers to block them.

Even in the absence of new legislation or regulations, however, all modern Web browsers can be configured to reject cookies--which means that a search engine or other Web site can't track you across visits. (See CNET News.com's FAQ on search privacy and FAQ on protecting yourself from search engines.)

The Center for Digital Democracy and PIRG say that social-networking sites--most notably the wildly popular MySpace.com and Facebook, with their some 140 million combined users--are increasingly "exploiting behavioral targeting and other advanced micro-marketing techniques" based on the detailed personal information that people include in their profiles.

"Instead of online communities supported by advertising, they are fast becoming marketing vehicles that host communications," an early version of the complaint states.

The groups also criticize companies that target their ads based on a person's perceived racial and ethnic background, citing, for instance, AOL's attempts to reach African-Americans through its "AOL Black Voices" portal. They also say it's worrisome from a privacy perspective that they're witnessing advertisers that attempt to group visitors into "behavioral groups" like "fashion freaks" or "nutrition nuts"--which has been a commonplace practice for decades in the magazine and direct-mail world.

Negative perceptions
The goal of the complaint is for the FTC to launch an investigation into each of those concerns and, more broadly, the data collection and behavioral targeting practices of various major Web advertising players. The groups said they hope the agency will use its existing legal authority to crack down on "unfair and deceptive practices" and suggested additional privacy rules would be advisable.

Companies called out by privacy advocates for their advertising practices have already been scrambling recently to fend off negative perceptions of their activities. Google launched on Wednesday a "privacy channel" on YouTube, which features descriptions of its privacy policies. Earlier this year, Google and other major search engines announced greater privacy protections for people, including procedures to delete or partially anonymize search logs.

AOL said on Wednesday that it would allow people to opt out of cookies that track surfing habits and use them to serve up targeted ads. In addition, the Network Advertising Initiative has long allowed people to opt out of targeted advertising displayed by companies including 24/7 Real Media and DoubleClick.

Rep. Edward Markey, a Massachusetts Democrat who heads a House of Representatives panel dealing with Internet issues, released a statement on Thursday supporting the need for the FTC to look into "the privacy impacts of Internet tracking and targeting techniques."

"When consumers search for information online," he said, "they may be unaware of marketers in their wake, who are scooping up the digital traces of consumers' online activities and compiling profiles that could undermine privacy."