The Office of Fair Trading is calling for sites to clearly identify which are “personalised” advertisements based on their previous web browsing habits. Behaviourally-targeted ads collect information through “cookies”, tiny files which are placed on a user’s computer after their first visit to a website. The OFT is concerned about the misuse of personal data […]
The Office of Fair Trading is calling for sites to clearly identify which are “personalised” advertisements based on their previous web browsing habits. Behaviourally-targeted ads collect information through “cookies”, tiny files which are placed on a user’s computer after their first visit to a website. The OFT is concerned about the misuse of personal data and says it raises concerns about privacy.
Heather Clayton of the OFT said: “The OFT is keen to engage with industry players and consumer groups while behavioural advertising is in its relative infancy. Discussions now about the potential for both benefits and harm, and how consumer protection legislation applies, will stand us in good stead in the event that industry action proves ineffective.”
The revenue from online behavioural advertising is currently between £64m and £95m, but this looks set to rise significantly in the future.
26/05/2010
The OFT report found that, while behavioural advertising may offer benefits to consumers such as, for example, free access to content, there are objections to the practice which centre around privacy issues and the possibility for the misuse of personal data.
To address these concerns, the OFT is now to encourage the IAB, the trade association for online advertising, to work with the industry to provide clear notices alongside behavioural adverts and information about opting out.
Under laws enforced by the Information Commissioner’s Office (ICO), it is a legal requirement for firms clearly to inform consumers about the purposes of storing a cookie or other tracking system on the user’s computer and to provide people with an opportunity to opt out.
The OFT believes that the Consumer Protection from Unfair Trading Regulations 2008 (CPRs) could also apply to business practices in this area, for example misleading consumers about the collection of information where this would lead consumers to alter their ‘transactional decision’. This would include, in the OFT’s view, a decision on whether or not to visit a website.
Should industry action prove ineffective, the OFT and the ICO are strengthening the effectiveness of regulation by seeking to agree a Memorandum of Understanding to establish in which circumstances the ICO, or the OFT, would take enforcement action.
In the event that the MoU covers areas where OFT and Ofcom have overlapping jurisdiction, the OFT and Ofcom would discuss, on a case by case basis, who would be best placed to act.
The study also examines the prospects for the online targeting of pricing based on previous purchases, browsing behaviour or geographic location.
Research suggests that consumer opposition to such practices would be very strong. This has led the OFT to conclude that consumers who knew that targeted prices were being applied would change their behaviour, meaning that failure to inform consumers about the practice could breach the CPRs and in such an event the OFT would consider enforcement action.
Director of regulatory affairs at the IAB, Nick Stringer, said that the OFT’s discussion document was a step forward for the industry.
“IAB research found that any consumer concerns decrease when presented with the relevant information about behavioural advertising as well as the tools to turn it on or off. The online advertising industry has already made a serious commitment and investment to safeguard consumer privacy whilst delivering a more relevant online experience,” he said.
www.oft.org.uk
