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By Kenneth Corbin
July 28, 2010
As it prepares a major report with guidelines for protecting consumer privacy online, the Federal Trade Commission is mulling a simple mechanism that would allow users to opt out of behavioral tracking across the Web, the head of the agency told a Senate panel on Tuesday.
FTC Chairman Jon Leibowitz said the system would be similar to the Do-Not-Call registry that enables consumers to shield their phone numbers from telemarketers.
The agency has been conducting a series of workshops regarding online privacy and advertising for several months, and plans to release a report detailing its recommendations later this fall. Throughout those sessions, Leibowitz said that staffers consistently heard from consumers and advocacy groups that online privacy controls need to be simpler than the current options.
"To this end, one idea we may explore in the context of behavioral advertising is a do-not-track mechanism that's more comprehensive and easier to use than the procedures currently available," Leibowitz told members of the Senate Commerce Committee. "Under such a mechanism, users could opt out of behavioral advertising more easily rather than having to make choices on website-by-website basis."
It's an issue that could have a potentially dramatic impact on everyone from website publishers to ecommerce marketers. Industry coalitions involving some of the largest Internet players have developed tools for consumers to opt out of behavioral tracking across their sites and ad networks, but Leibowitz suggested a browser-based tool that would give users the option of blocking data collection across the Web.
But he acknowledged, with some disappointment, that the FTC is limited in the extent to which it can exercise oversight authority over the online advertising industry.
Leibowitz and Commerce Committee Chairman John Rockefeller had fought to include provisions in the recent financial reform bill that would give the FTC broad rulemaking authority, but that language was stripped out of the final version, thanks, in part, to a concerted lobbying effort by the advertising industry.
That defeat preserved the status quo at the FTC, leaving it with very limited rulemaking powers outside of authorities specifically granted by an act of Congress, such as its ability to police abuses of the Do-Not-Call registry.
Since no such authority has been established in online advertising, the recommendations the commission produces this fall will almost certainly advance its position of urging the industry to unite in a broad-based self-regulatory framework that would protect consumers and punish -- or at least shun -- bad actors.
In the event of resistance from the industry, Leibowitz said the FTC would use its "bully pulpit" to pressure companies to adopt its recommendations for protecting privacy, which would also likely include guidelines to clarify for consumers the information sharing among various players in the online advertising sector that goes on behind the scenes.
"One of the things that became absolutely clear to us during our roundtables this year is that there's a huge disconnect between what consumers think happens to their data and what really happens to their data," Leibowitz said. "Most consumers believe that a privacy policy protects their privacy. Instead, a privacy policy delineates their rights and their lack thereof."
Absent the explicit rulemaking authority Leibowitz sought under the stimulus bill, a condition he described today as a "limitation," he noted that the FTC still enjoys a broad mandate to pursue civil actions against companies on the grounds of unfair or deceptive trade practices.
But if the agency is still unable to rein in or shut down the bad actors, and the self-regulatory guidelines it issues later this year still fall short on protecting privacy, Leibowitz said that momentum for specific privacy legislation would likely build in Congress. House lawmakers have only begun to debate legislation, and some Senate members have signaled that they are interested in introducing a privacy bill. But ahead of the FTC's report in an election-shortened session, the prospects for passage this year are slim.
"It's really in the hands of the private sector," Leibowitz said. "If they want to do a better job of ... giving clear choices and have clearer notice, then I think it's in their hands to avoid legislation. I think if they don't, and if we don't see more progress, I think you're going to see probably in the next Congress a fair amount of interest in moving legislation forward to have more prescriptive rules."
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