Consumer Watchdog Asks FTC To Probe Online Advertising Firms' Deceptive Practices; Stanford Security Lab Study Demonstrates Self-Regulation Doesn't Work, Group Says

WASHINGTON, July 14, 2011 /PRNewswire-USNewswire/ -- Consumer Watchdog today called on the Federal Trade Commission to investigate eight online advertising companies for violating their privacy policies regarding online tracking and said the companies' deceptive behavior shows self-regulation doesn't work.

The companies – members of the self-regulatory Network Advertising Initiative (NAI) -- violate their stated policy of not tracking consumers who opt out of receiving ads based on their online activity, according to a new study by the Stanford Security Lab.

Read the study here: http://cyberlaw.stanford.edu/node/6694

In a letter to FTC Chairman Jon Leibowitz Consumer Watchdog called on the Commission to use its powers under Section Five of the Federal Commission Act to bring action against the ad companies.

"We call on the commission to hold these companies responsible for their unfair and deceptive practices. Once again we see a self-regulatory system established only to find a significant number of the participants in violation of the rules," wrote John M. Simpson, Consumer Watchdog's Privacy Project Director.

Read the letter here: http://www.consumerwatchdog.org/resources/ltrleibowitz071411.pdf

"The industry's opt-out system is bogus," said Simpson. "We need a simple Do Not Track mechanism required by law and governed by regulations enforced by the FTC."

Researchers Jonathan Mayer, Jovanni Hernandez and Akshay Jagadeesh tested how 64 members of the self-regulatory Network Advertising Initiative (NAI) responded when a consumer opts out of receiving behavioral advertising through the association's website.

NAI offers consumers a cookie-based system of opting out of receiving ads that are targeted based on their online behavior. (http://www.networkadvertising.org). Once an opt-out cookie is placed on a consumer's web browser, NAI members promise not to serve ads based on web surfing habits. The Stanford researchers found the advertising companies responded in two ways. Thirty-three responded by leaving tracking cookies, but not serving targeted ads. Thirty-one removed tracking cookies in response to the opt-out cookie. Ten companies went beyond their privacy policies and removed the tracking cookies even though they did not promise to do so.

Eight companies violated their privacy policy statements, the researchers found. They promised not to track, but left tracking cookies in place. Those companies are 24/7 Real Media, Adconion, AudienceScience, Netmining, Undertone, Vibrant Media, Wall Street on Demand and TARGUSinfo Advisor.

Consumer Watchdog is a non-partisan public interest organization with offices in Santa Monica, CA and Washington, D.C. For more information, visit us on the web at http://www.ConsumerWatchdog.org

SOURCE Consumer Watchdog