DoubleClick Documents Reveal More Legal, Regulatory Troubles

Documents filed with the Securities and
Exchange Commission this week reveal that online advertising giant DoubleClick is cooperating with a Federal Trade Commission inquiry into its
privacy practices, and that the company is also fielding two previously
unreported lawsuits.

The news comes on the heels of DoubleClick unveiling a multi-pronged
privacy initiative aimed at deflecting the complaints lodged against it by
privacy advocates. The effort involves a banner ad campaign, a new Web
site, and the creation of a board of privacy experts to advise DoubleClick.

In the documents filed by DoubleClick regarding its proposed new offering
of stock, the company said it received a letter from the FTC on February 8
informing the company that it was the subject of an inquiry.

The Electronic Privacy Information
Center, an advocacy group, filed a complaint with the FTC last week,
alleging that DoubleClick engaged in unfair and deceptive trade practices
relating to its compilation of data about Internet users.

The documents also show that DoubleClick faces six privacy-related lawsuits
filed over the past few weeks. Although four of these suits had previously
been made public, two that were filed on January 28 were not revealed until
now.

Although DoubleClick admits that these lawsuits were only recently filed,
it said, “we believe these lawsuits are
without merit and we intend to vigorously defend ourselves against them.”

Decorse v. Doubleclick was filed in the Superior Court of the State of
California, Marin County, and alleges that the ad company engaged in
unlawful business practices by collecting and using information about
Internet users. The complaint seeks damages and injunctive relief.

The second newly-revealed suit, Steinbeck v. Doubleclick, alleges similar
violations, but it was filed in U.S. District Court in California and cites
federal law.

DoubleClick has been under increased fire from privacy advocates since its
acquisition of Abacus Direct,
which has databases of consumers’ offline purchasing behavior. The company
wants to put together that offline data with the information it’s gathering
online, so it can better target the ads it serves.

Privacy advocates contend that DoubleClick isn’t doing a good enough job of
informing people that data about them is being collected. They also think
DoubleClick should allow consumers to opt-in to the data collection system,
rather than being forced to opt-out.