Online ad firm Avenue A put an end to a two-year legal saga Thursday, when it reached an agreement to settle all the privacy-related federal and state class action lawsuits brought against the company.
As part of the settlement, Avenue A agreed to abide by a set of guidelines governing its privacy policies and how it implements them, in addition to agreeing to reimburse the plaintiffs for $925,000 in legal fees. An auditing firm will annually review Avenue A’s compliance.
“We got swept up in the enthusiasm of the plaintiffs attorneys,” said Jeffrey Miller, Avenue A’s senior vice president for legal and privacy affairs. “What we saw was this never-ending battles with exorbitant legal fees.”
Under the terms of the settlement, Avenue A agreed to implement policies for protecting and routinely purging online-activity data collected; to follow its posted privacy policy regarding the use of online data; and to mount a consumer education campaign with 100 million banner ad impressions.
“Basically, we agreed to do what we’ve always done,” Miller said.
Attorneys for the plaintiffs did not return phone calls seeking comment.
The class action suits against Avenue A began with a suit filed against the company in Washington state in November 2000, accusing it of covertly and illegally tracking Internet users through the cookies to glean personal data the company could use. Avenue A vigorously denied the allegations, pointing to the fact that its cookies only collected anonymous information in accordance with its Network Advertising Initiative-approved privacy statement.
A summary judgment was ordered by a federal court in September 2001, but the company still had an outstanding class action case in Texas that was followed by another filed in California.
By settling, Miller said Avenue A could avoid a drawn-out distraction while protecting its business from harmful restrictions.
“We just felt it was more prudent to settle,” he said.
Miller said Avenue A was targeted only because it was in the same business as DoubleClick, which had raised the hackles of privacy advocates in March 2000, when it considered marrying the anonymous information its cookies collected with personally identifiable information in its Abacus database. DoubleClick quickly backtracked from the idea, even apologizing for it, but not quickly enough to stop investigations from the Federal Trade Commission and a flood of lawsuits against the company.
The FTC effectively cleared DoubleClick of wrongdoing in January 2001, when it closed its investigation. This past March, DoubleClick settled its class action lawsuits, agreeing to a similar set of conditions regarding safeguarding and regularly purging user information. DoubleClick agreed to pay $1.8 million in lawyers’ fees.
A final approval hearing of the Avenue A settlement will be held on March 6, 2003, in U.S. District Court for the Western District of Washington.
The ending of the DoubleClick and Avenue A cases might mean the end of class actions as a tool to force ad-serving companies to change their privacy practices, said one privacy advocate.
“The litigation on the present law seems to have reached some closure,” said Jason Catlett, head of Junkbusters, a privacy-advocacy group. “The result is not at all satisfactory to privacy advocates. What we want is statutory protections for Internet users so they can’t be tracked.”
