'Net Features : ftc

FTC Speaks on Social Ad Disclosures

Pete Prestipino — Wed, 13 Mar 2013 18:25:00 GMT

The Federal Trade Commission Tuesday released updated guidance for mobile and other online advertisers, explaining how to make disclosures clear and conspicuous to avoid deception.

The FTC’s new Dot Com Disclosures guide (PDF), which was initially released back in 2000 (a far different digital time) has been updated to take into account the expanding use of smartphones, as well as the rise of social media marketing.

Not much has really changed in the document, however, other than to expand the guidance across all known digital mediums and clarify that disclosures should be “as close as possible” to the relevant claim.

Agencies and advertisers should examine the document rather closely though, if only for the confidence that their campaigns are in compliance with the FTC guidelines – particularly the sections on proximity and placement, prominence, the use of “understandable language” as well as how this all applies to multimedia messages.

Designing for Privacy & Web Success

Administrator — Fri, 18 Jan 2013 18:56:00 GMT

By Timothy J. Toohey, Partner at Snell & Wilmer, LLP

It is a safe prediction for 2013 that public awareness of websites’ data privacy issues will continue to increase. In the last few years, popular websites, including Google and Facebook, have been almost constantly in the news regarding alleged privacy violations. For example, in 2012 the Federal Trade Commission (FTC), which is the primary federal regulator of privacy issues in the U.S., settled privacy violations with several prominent companies, including a record $22.5 million settlement with Google regarding its misrepresentation of privacy assurances to users of Apple’s Safari browser. In another prominent case, the FTC entered into a settlement with anonline advertising network that had secretly gathered data from millions of consumers. In addition, the FTC alleged in a complaint that the default settings of a file-sharing application, which allowed sharing of all existing files on the device with people in the consumer’s immediate vicinity and throughout the world, was an example of “unfair design.”

When used in conjunction with website design, “privacy” typically refers to the protection of a user’s personal data in reference to certain “Fair Information Principles” or FIPs. FIPs typically include limits on the collection, processing and use of personal data, limits on data retention, notice to users, individual choice or consent regarding the collection and subsequent use of personal data and transparent data processing.

In recent years, public opinion surveys indicate that users are sensitive to the privacy of their personal data online. For example, a March 2012 survey conducted by the Pew Internet Project indicates that two-thirds of those surveyed disapproved of having their personal data used to personalize search results and that the same percentage views online targeted advertising negatively. Another report found that 81 percent of parents of teens were concerned about how much information advertisers can learn about their child’s online behavior.

Federal and state regulators are also increasing attention paid to privacy issues. In addition to the Google settlement, the FTC has recently settled prominent enforcement actions against Facebook, Myspace and other sites. In December 2012, the FTC also announced a major revamp to its rules regarding the Children’s Online Privacy Protection Act, which requires companies to get parental approval before collecting online information from children under 13 and limits collection of information regarding children. Under the revised rules, the restrictions on collection of personal information will include geolocation information, photographs and videos, as well as persistent identifiers that recognize users over time and across different websites, including IP addresses. Covered website operators, which now include third parties collecting information, as well as the websites themselves, must also adopt reasonable procedures for data retention and deletion.

At the state level, application design is receiving increasing attention from regulators concerned about user privacy. For example, the California Attorney General has released a series of privacy best practices for mobile applications that would inform users before collecting data and has sued Delta Airlines for failing to provide notice to consumers that it is collecting sensitive information on its mobile application.

Facing this myriad of challenges, website designers may be tempted to leave privacy issues to lawyers or other professionals, if and when they arise. Experience indicates that this would be a mistake. Privacy is much better addressed in an early stage of website design than after problems arise. Moreover, this is consistent with the principles of “privacy by design” that are receiving ever increasing attention from regulators, including the FTC and the White House.

According to the FTC’s 2012 report Protecting Consumer Privacy in an Era of Rapid Change, privacy by design means that “companies should promote consumer privacy throughout their organizations and at every stage of the development of their products and services.” Rather than present consumers with lengthy privacy notices, privacy by design encourages companies to incorporate FIPs, including reasonable collection limits, sound retention and disposal practices, and transparency into the entire life cycle of a product or service. Context and user expectations are also key elements of privacy by design. For example, data collection by a website should be consistent with the context of the transaction. As stated in the White House’s 2012 report Consumer Data Privacy in a Networked World, which proposes a Consumer Privacy Bill of Rights for online transactions, the consumer should be seen as an active participant in the online experience. Companies that collect consumer data are “stewards of data” and as such must respect consumers’ expectations regarding the collection, use and disclosure of data.

Another important aspect of privacy by design is recognizing that the relationship between consumers and the company collecting personal information through a website may change over time in unforeseeable ways. As the White House proposal recognizes, “adaptive uses of personal data may be the source of innovations that benefit consumers. However, companies must provide appropriate levels of transparency and individual choice—which may be more stringent than was necessary at the time of collection—before reusing personal data.”

For website designers, the principles underlying privacy by design may seem abstract or inconsistent with current design practices. The challenge for designers therefore is to translate privacy principles, including transparency and respect for context, into practical design practices.

Privacy researchers Ira S. Rubinstein and Nathaniel Good have recently suggested one approach to this problem that incorporates privacy by design into the established principles of user-experience design (UXD). Because UXD focuses on obtaining information concerning the interaction between users and a design to promote positive user experience, Rubinstein and Good suggest that consumers’ privacy concerns could be incorporated as part of UXD research. Along with other matters of importance to the user, such as features and user interface, UXD research could include user expectations regarding privacy, such as collection and use of personal data, data retention, and sharing of information with third parties. Armed with this research, design professionals could incorporate privacy protections into designs from the outset, rather than waiting for privacy issues to emerge after the website has launched.

In order for this approach to succeed, professionals in the website design field first need to be equipped with an understanding of what works and does not work in website privacy. Although there is a wide variety of “privacy fails,” analyzing the experience of prominent companies, such as Google and Facebook, among others, helps highlight privacy issues that may arise when the flow of personal information is obscured or when users do not understand the scope of the use of their personal information and to whom it is being disclosed. As recent examples demonstrate, companies ignoring privacy concerns may suffer significant negative consequences, including loss of user confidence, negative publicity, or regulatory actions, including consent decrees and fines. Incorporating respect for users’ privacy into the design process may not only help avoid such consequences, but also confer a competitive advantage. Meeting user expectations therefore makes good business sense in our increasingly privacy conscious world.

About the Author:

Timothy Toohey is a partner in the Los Angeles office of Snell & Wilmer L.L.P. He is a U.S. Certified Information Privacy Professional (CIPP/US) and an E.U. Certified Information Privacy Professional (CIPP/E). His practice concentrates on complex litigation, intellectual property and privacy and data protection matters. Toohey has handled numerous matters related to privacy and data protection, including those involving federal, state and international laws connected to data breach and disclosure of personally identifiable information. He also has extensive experience in all elements of intellectual property counseling and litigation, including trademark, copyright and patent matters.

FTC Offers Mobile Advertising and Privacy Guidance

Michael Garrity — Tue, 16 Oct 2012 18:45:00 GMT

Mobile ads are the next big thing for the advertising industry, so did you really think that the FTC wasn’t going to get involved sooner or later?

In early 2012, the group was looking into updating its online advertising guidelines to adapt them to new digital marketing avenues, particularly social and mobile, but that won’t be completed for a few more months. Right now, there are already tons of applications on mobile devices across the country, which prompted the Commission to released new guidelines for app developers known as “Marketing Your Mobile App: Getting It Right from the Start.”

The guide, which is intended for an audience that is largely unfamiliar with FTC compliance guidelines, primarily gives advice about “truthful advertising” and privacy issues.

For starters, it tells developers to make sure that their advertising tells “the truth about what” their app is able to do, whether it’s on a website, in an apps store or even within the application. It even offers up a handy rule of thumb, that if they don’t have “solid proof” to back up the objective claims of their app’s capabilities, they probably shouldn’t bother advertising them. It also advises them to disclose any key information “clearly and conspicuously,” meaning that it is big and clear enough that user’s can easily see it and understand what it is saying.

In terms of privacy, the FTC suggests that developers build in privacy considerations from the start of the project, which means limiting the information they collect, securely storing what they acquire and safely disposing of what they don’t need. Additionally, the organization insists that these developers are transparent with users about their data collection and sharing practices, and that they offer privacy choices (e.g. privacy settings, opt-outs or other ways that users can control their personal information) that are easy to find and use.

As with advertising content, the guidelines encourage developers to honor their privacy promises and keep user data secure. It says they should collect only the data they need, secure it by taking “reasonable precautions” against known security risks, limit its access to a “need-to-know basis” and safely dispose of what they do not need. Finally, it recommends that they only collect “sensitive information” (i.e. medical, financial, location, etc.) with user consent, and that they are especially careful when collecting data from children (under 13) and require parental consent when doing so.

If you’re interested in reading the full report, you can check out a PDF version by clicking here. And don’t forget to be on the lookout for the updated mobile advertising guidelines by the end of the year.

Tracking the Behavioral Targeted Ad Debate

Michael Garrity — Sat, 21 Apr 2012 22:00:00 GMT

The major advantage of online advertising is the ability to target ads to consumers based on each individual’s interests, geographic location and other personal characteristics, which ultimately makes these ads more effective for marketers and consumers alike.

However, the fact that advertisers are able to track people based on their interests and online behavior is understandably off-putting to many Web users. As a result, consumers and consumer advocacy groups have come out to demand transparency with regards to advertiser practices.

Since this push, the Federal Trade Commission (FTC) has gotten involved, most notably by introducing the Final Privacy Framework Report to outline guidelines as to how companies can and cannot use consumer data gathered on the Internet.

Two primary aspects of the industry’s self-regulatory commissions, the Network Advertising Initiative (NAI) and the Digital Advertising Alliance (DAA), have both seen a significant swell of participation over the last few years. At present, the NAI boasts over 80 different companies as partners.

To opt out or not to opt out ...
The real important figures, which are outlined in a new infographic by Loeb & Loeb, have to do with how many consumers are actually opting out. In the last four years, nearly 10 million users have visited NAI’s opt-out site. That may not seem like much, but 2011 saw 5.9 million of those visitors, nearly twice as many as 2008 to 2010 combined. In that time, 1.75 million (or about 17 percent) of these visitors have opted out of cookie tracking.

In the end, this seems like it is going to be a real issue for online advertisers. One Pew survey points out that as many as 73 percent of consumers are “not OK” with search engines keeping tabs on their searches to personalize results, which is in effect the same process that marketers use to serve targeted ads. This begs the question: If the majority of Web users begin to reject behavioral tracking, how can (or should) marketers attempt to continue serving relevant ads that are as effective as their current offerings?

View the full infographic below:

FTC Approves Google AdMob Acquisition

Mike Phillips — Mon, 24 May 2010 14:40:00 GMT

The FTC on Friday approved Google's $750 million acquisition of mobile advertising network AdMob, clearing the path for Google's latest mobile strategy and fueling the rivalry with Apple, which acquired Quattro -- another major mobile advertising network -- in January, 2010. That deal seems to have helped Google avoid "monopoly" status in the mobile advertising space. "Apple did Google a huge favor," said David Balto, a former FTC official now a fellow at the Center for American Progress.

Look for mobile advertising to have a big year -- both through mobile search and, perhaps more important, via mobile apps working within Google' Android system and Apple's App Store and recently announced iAd advertising system. eMarketer predicts that mobile advertising will be a multi-billion dollar market as early as 2013.

Website Magazine's July, 2010 issue (available only to professional-level subscribers) focuses on mobile apps, mobile advertising and more. Register for a professional-level subscription today so you don't miss it.

New FTC Regulations Apply to Marketers, Affiliates

Mike Phillips — Thu, 15 Oct 2009 19:42:00 GMT

Thinking of enlisting bloggers to help sell your products? If so, you now need to think about requiring disclosures, and keep a close eye on what those reviewers are publishing.

Recent announcements of tighter restrictions by the Federal Trade Commission (FTC) are giving retailers even more reasons to keep an eye on their affiliates. One of the additions to the new Guides Concerning the Use of Endorsements and Testimonials in Advertising looks to keep tighter restrictions on how retailers promote their products - specifically endorsements by third parties. The text in the document essentially states that favorable reviews of products can be considered "endorsements;" an advertising message that consumers will likely believe reflects the opinions, beliefs, findings or experience of a party other than the sponsoring advertiser. These endorsements then, must be disclosed as such to avoid penalties and fines.

And then there's this from the Guides:

For example, a blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself. In this situation, whether or not any positive statement the blogger posts would be deemed an “endorsement” within the meaning of the Guides would depend on, among other things, the value of that product, and on whether the blogger routinely receives such requests. If that blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group that is the manufacturers’ target market, the blogger’s statements are likely to be deemed to be “endorsements,” as are postings by participants in network marketing programs. Similarly, consumers who join word of mouth marketing programs that periodically provide them products to review publicly (as opposed to simply giving feedback to the advertiser) will also likely be viewed as giving sponsored messages.

What does it all mean? There is much more to these guides than can be summed up in a blog post. But without question, retailers, affiliates and "endorsers" are all going to need to be on the same page. They are all seemingly responsible to each other (and can be held as such) to make sure the public is not being deceived into purchasing products that do not deliver on their promises. Companies specifically will need to take their reputation (and marketing) management efforts to a new level. Web 2.0 marketing just got a little more rigid.