CDD, U.S. PIRG, and World Privacy Forum Call on Federal Trade Commission to Investigate Data Collection 'Wild West' Involving Real-Time Advertising Auctions and Data Exchanges

In a complaint
filed today with the Federal Trade Commission, the Center for Digital
Democracy, U.S. PIRG, and the World Privacy Forum challenged the
commission to investigate the growing privacy threats to consumers from
the practices conducted by the real-time data-targeting auction and
exchange online marketplace. Increasingly and largely unknown to the
public, technologies enabling the real-time profiling, targeting, and
auctioning of consumers is becoming commonplace. Adding to the privacy
threat, explains the new complaint, is the incorporation and expanding
role of an array of outside data sources for sale online that provide
detailed information on a consumer.

"This massive and stealth
data collection apparatus threatens user privacy," the 32-page filing
explains. "It also robs individual users of the ability to reap the
financial benefits of their own data-while publishers, ad exchangers and
information brokers ... cash in on this information." Among
the companies cited in the complaint are Google, Yahoo, PubMatic,
TARGUSinfo, MediaMath, eXelate, Rubicon Project, AppNexus, and Rocket
Fuel. The complaint also cites the failure of privacy policies and
self-regulation to meaningfully safeguard consumers.

"FTC inaction,"
declared CDD Executive Director Jeff Chester, "has encouraged the data
collection and ad targeting industry to expand the use of consumer
information for personalized advertising. The commission's failure to
adequately protect the privacy of consumer transactions online,
including those that involve financial and other sensitive information,
is irresponsible. U.S. consumers, especially during this time of
economic hardship for so many, need a commission that is proactive in
protecting their interests."

"Consumers will be most shocked to
learn that companies are instantaneously combining the details of their
online lives with information from previously unconnected offline
databases without their knowledge, let alone consent," said U.S. PIRG
Consumer Program Director Ed Mierzwinski. "In just the last few years, a
growing and barely regulated network of sellers and marketers has
gained massive information advantages over consumers."

Recent developments
in online profiling and behavioral targeting-including the instantaneous
sale and trading of individual users-have all contributed to what CDD's
filing termed a veritable "Wild West" of data collection. Participating
companies are employing "practices that fail either to protect consumer
privacy or to provide for reasonable understanding of the data
collection process, including significant variations in how cookies are
stored and the outside data sources used." For its part,
the advertising industry has been anything but shy in describing the
power of the new real-time online ad profiling and auction system.
"...Internet ad exchanges," explains one online marketer quoted in the
complaint, "... are basically markets for eyeballs on the Web. Advertisers
bid against each other in real time for the ability to direct a message
at a single Web surfer. The trades take 50 milliseconds to complete."

Accordingly, CDD,
U.S. PIRG and WPF called on the FTC to take the following actions:

* Compel
companies involved in real-time online tracking and auction bidding to
provide an opt-in for consumer participation in such systems.
* Require that these companies
change their privacy policies and practices to acknowledge that their
tracking and real-time auctioning of users involve personally
identifiable information.
* Ensure
that consumers receive fair financial compensation for the use of their
data.
* Prepare a
report for the public and Congress within six months that informs
consumers and policymakers about the privacy risks and consumer
protection issues involved with the real-time tracking, data profiling,
and auctioning of consumer profiles.
* Address
the implications of potential information "redlining" of consumers,
with companies deciding not to provide editorial content based on an
assessment of the marketing value of a particular online consumer's
behavioral data.

The group's FTC filing is
available at https://democraticmedia.org/real-time-targeting.