Ad Networks Violating Privacy?

Two consumer advocacy groups want the Federal Trade Commission (FTC) to investigate alleged unfair and deceptive practices by Internet advertising networks.

In a joint filing Wednesday, the Center for Digital Democracy (CDD) and the U.S. Public Interest Research Group (U.S. PIRG) claim current privacy disclosure statements are inadequate in light of increasingly sophisticated data-collection techniques.

“They [ad networks] are unleashing powerful new tools without the conscious awareness of consumers,” CDD Executive Director Jeff Chester told internetnews.com. “There needs to be some meaningful consumer safeguards.”

While most companies and networks collect only non-personally identifiable information from users, the filing claims unprecedented amounts of data are being collected and associated with each unique visit to a Web site.

“Current privacy disclosure policies are totally inadequate, failing to effectively inform users how and what data are being collected and used,” the filing states.

Techniques cited in the filing include Web analytics, behavioral targeting, “virtual reality” media, data mining and audience targeting and tracking.

Collectively, CDD and U.S. PIRG contend, the new techniques are creating a new online environment in which “engagement gives way to entrapment” and “personalization impinges on privacy.”

According to the filing, “Even if these companies don’t know our names, through online tracking and analysis they literally know every move we make.”

As an example, the filing cites a tracking technique involving positioning invisible pixels on heavily trafficked areas of a site. With the pixels in place, a site can anonymously observe a consumer’s action while on the site.

Targeted messages are then delivered to the consumers after they leave the site.

“I’m not against advertising, but media companies have gone too far in allowing too much data to be collected,” Chester said.

In particular, Chester cited the vast advertising network of Microsoft, which includes the MSN portal, Windows Live search engine, e-mail, instant messaging, the Office Online suite, a mobile software platform, an online video service and a blogging space.

“Microsoft, like Google and Yahoo, is actively rewriting the rules that govern the online marketplace,” Chester said.

U.S. PIRG Consumer Program Director Ed Mierzwinski said in a statement the net effect leaves consumers at risk of unfair pricing schemes and with fewer choices.

“The emergence of this online tracking and profiling system has snuck up on both consumers and policy-makers,” he said.

Chester said it is the FTC’s job to protect more than corporate self interest.

“The FTC has largely ignored the critical developments of the electronic marketplace that have placed the privacy of every American at risk,” he said.

“The public interest matters, too, and it is the FTC’s responsibility to protect and promote that vital perspective against the most egregious of the new invasive advertising practices.”

The FTC had no comment on the filing.