The Federal Trade Commision has been breathing down the neck of online advertisers for months now. But under David C. Vladeck, the new head of the Bureau of Consumer Protection, it looks like the investigation into behavioral targeting tactics online may take a more emotional shift.

Congress has been mulling an opt-in bill that would require all advertisers online to ask consumers every time they try to use their data. But now Vladeck seems to be proposing a new measure for proper advertising online which is something of a dignity index.

Vladeck, who has been in his position for six weeks now, told The New York Times this week that while the FTC has normally only imposed itself in situations that result in economic loss to the consumer, he is particularly concerned with issues that effect consumers' dignity.

This new concept could make the waters particularly murky for policing online advertising tactics. Vladeck uses a mall example to demonstrate his point:

"Say you’re in a mall and someone follows you around taking notes on everything you stop and look at. Have you been harmed? You’re wrestling with your intuition that there’s something icky about that. The question is, is this legally cognizable harm?"

Vladeck thinks it is:

"I would feel that someone following me around and looking to see whether I’m a boxer or brief guy or whether I like blue socks or black socks, or whether I have terrible taste in ties — which I apparently do, that’s why I don’t wear a tie — I think it’s inappropriate. I think that we in society do place a value, although not easily quantifiable, on anonymity. And having someone follow you around when you go to the mall to clothes shop or buy presents for other people or just to window shop, there is something there that I think is an affront to dignity."

Meanwhile, that's already happening. Offline marketers have been using personally identifiable information to target consumers for years. Making a credit card purchase in a mall (and disclosing zip code info), allows marketers to send consumers new catalogs featuring new blue socks and boxer briefs just like the ones they purchases at the store.

But the FTC is highly nervous about any practices involving consumer information online. And once again, Vladeck has made clear that the FTC is not willing to make a distinction between personal data and personally identifiable data. Advertisers online track consumers' web habits, but they make the distinction that they do not identify them personally. But Vladeck is not convinced.

"There’ve been all sorts of disclosures with allegedly anonymous data. The problem is that it’s like a mosaic. If you have the information released and you can match it to other publicly available data about somebody, you can often put together a pretty complete picture. You know, I think were past that debate. At least, I think the F.T.C. is past that debate; whether the rest of the world has caught up with us, I don’t know. But we don’t find that a tenable distinction. And if you look at our online behavioral advertising report we make this point, I think, pretty emphatically."

That spells trouble for online advertisers who have predicated their ad income on targeted advertising. But unlike FTC chairman Jon Leibowitz, who has advocated for blanket opt-in policies online, Vladeck has not stated where he stands on the issue yet. But, he is convinced that efforts by the industry to self-regulate have not passed muster.

"I think its helpful but it’s not sufficient. Apart from the fact that it’s a small group of advertisers, there doesn’t seem to be any meaningful, there’s no real enforcement program — I mean it’s very much a self-enforcing process. We want to make sure that consumers are really safeguarded in this environment. And we’re happy to see industry trying to police itself, but I don’t think that’s sufficient."

Does that mean that government regulation is on the horizon? It sure sounds like it. Though there is one silver lining. Vladeck says that he is not eager to regulate advertising because "the hammer that we hold is an imperfect hammer." And if the FTC does go looking for some sort of real regulation, Vladeck says his target would be those advertisers who are flagrant in their abuses of consumer privacy:

"One way we can affect policy is go after the outliers, people that we think are engaged in misconduct, and use those cases to exemplify what we believe the lines are."

That seems to be the logic in the recent case the FTC brought against Sears, who was accused of culling consumer information without properly disclosing what they were going to do with it. Sears had put its practices in a privacy policy, but the FTC did not think that was sufficient. The company has since settled the case.

Taking out only companies that go above and beyond accepted practices could help define the rules of behavioral targeting if online advertising's major players take head of the cases brought against specific companies and make sure their policies fall in order. But if the FTC's guidelines cut too deep, or if it sets the bar for something that is "an affront to dignity" too high, it could severely hinder the business of online advertising. But Vladeck is not concerned about that:

“Let people vote with their feet. If the marketers are right, and the consumers like behavioral advertising, then it should be no big deal."

Meghan Keane

Published 5 August, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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