July 28, 2000

Thursday's approval by the Federal Trade Commission of the Network Advertising Initiative's Self-Regulatory Principles for Online Preference Marketing may have been a victory for self-regulation of the online advertising industry. But consumer advocates are deriding it as a stinging defeat for consumers.

'The FTC has given a green light to DoubleClick and the other online advertising networks to add names and addresses to online profiles,'
said Jason Catlett, president of Junkbusters Corp., of Green Brook, N.J., and an outspoken privacy advocate.

The Self-Regulatory Principles laid out by the NAI, a coalition of nine online advertising networks, do allow for 'opt-in' consent for combining personally identifiable data with clickstream data. That is, consumers would have to specifically permit advertisers to combine their personally identifiable data with their clickstream data. However, the principles require consumers to 'opt out' of having their personally unidentifiable data collected... that is, they must specifically tell advertisers not to collect the data, or else it will be collected.

But privacy advocates ridicule both aspects of the plan, insisting that all consent should be opt-in and that advertisers should never be allowed to collect any data on consumers without first getting a consumer's permission to do so. And even where the NAI principles do require opt-in consent, privacy advocates pointed out the lack of oversight.

'In the world of self-regulation, there's no legal or public counterbalance to make sure the rules are strong,'

said Marc Rotenberg, president of the Electronic Privacy Information Center.

Legislation Necessary Now?

Privacy advocates also assailed the NAI principles for not providing adequate guidelines for consumers to access information that online advertising networks have collected on them. They insisted that legislation will now be the only way to ensure that consumers' rights are protected.

'Their words look good, but once you get behind the words it's very disturbing,'

said Frank Torres, legal counsel for the Consumers Union in Washington.
'Legislation is now necessary. This makes clear that self-regulation isn't going to work.'

Even FTC Bureau of Consumer Protection Director Jodie Bernstein, while defending the FTC's decision to approve the NAI principles, said legislation is likely, noting that Arizona Senator John McCain, chairman of the Senate Commerce Committee, has already introduced legislation to protect consumer privacy online.

'There will be lots of opportunities for all parties to work out their differences on this, and that includes drafting legislation,'
Bernstein said.

But not everyone is willing to give up on self-regulation just yet. Bonnie Lowell, CEO of New York privacy software vendor Youpowered and chief technology officer for the Personalization Consortium and chair of its privacy committee, described the NAI principles as a
'huge step in the right direction.'

Lowell noted that the self-regulatory principles do have their shortcomings, specifically the lack of third-party oversight, but she said those issues are not so easily worked out and consumers still will have a greater degree of protection than before.

'If (the NAI principles) are lived up to, we won't have blind profiling going on, where there's nothing telling you that a third party is gathering data on you,'

she said.
'This isn't a solution, but it is a positive step.'

Lowell argued that the threat of legislation should compel the online advertising industry to follow the NAI principles.

'Legislation is a double-edged sword. It could be the implosion of e-business.'

Written by OB1 Knordic

31.07.00. Front Page

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