Online Advertisers, Mobile Carriers Seen as Targets of Consumer Enforcement
SAN FRANCISCO -- The principle “follow the money” increasingly is leading FTC Comr. Jon Leibowitz, N.Y. Attorney Gen. Andrew Cuomo (D) and other regulators to pursue electronic advertisers over deceptive or intrusive marketing done on their behalf, D.C. lawyer Christine Varney, a Clinton-era FTC commissioner, said: “You ought to be very concerned” about not being insulated from liability by using contract marketers. She spoke late Wed. on a panel at the ad:tech conference here.
Sign up for a free preview to unlock the rest of this article
Timely, relevant coverage of court proceedings and agency rulings involving tariffs, classification, valuation, origin and antidumping and countervailing duties. Each day, Trade Law Daily subscribers receive a daily headline email, in-depth PDF edition and access to all relevant documents via our trade law source document library and website.
Privacy enforcement by the FTC and state AGs will be spurred by “behavioral profiling and targeting” that promises to make digital advertising much narrower and more effective than mass marketing, Varney said. Drug makers, for instance, will be unable to resist trampling privacy by targeting ads for a product to people who mention having the disease it’s for in e-mail to friends. “I can assure you the government would be horrified,” Varney said. State attorneys general “are very active[ly] looking at social networking,” and “that’s going to lead them to other privacy issues,” she said, predicting Cuomo “will be extremely active.”
“It’s really only a matter of time before the regulatory officials step in” on behavioral targeting, interactive- marketing privacy consultant Alan Chapell said. Of 30-35 companies pitching themselves as doing this targeting, only 10 participate in the Network Advertising Initiative that, in response tot he DoubleClick case, has tried to set standards for online information collection and consumer choice and notice, he said: “This is not a healthy industry self- regulatory program.” The risk of regulation will only rise when marketers’ profiling information is merged with mobile carriers’ tracking data, Chapell said.
Internet marketing is bound to court regulatory and legal trouble, since with “shoe-string companies” exerting so much influence, “you run the risk of having a very unhealthy ecosystem,” Chapell said. A company “trying to do the right thing” is “actually at a disadvantage when competing against the guy or the woman operating out of the garage,” he said.
Regulators also are interested in ring tone sales, Varney said. They're concerned, for instance, about parents finding -- and having difficulty reversing -- unexplained bill charges for tones bought by their children, she said. There’s a simple solution to all disputes over authorization for charges for mobile content and services, Chapell said: Send an SMS alert to the designated primary handset in a family plan any time a charge is racked up on one of the other cellphones. “We'll see” if carriers do this, he said: “A boy can dream.”
Carriers will be held to account for misdeeds by sellers of mobile content and services, Chapell said. Carriers won’t elude regulators for long by saying problems “have nothing to do with us -- talk to someone further down the chain” while telling content and service providers that “we're a value added pipe; we're entitled to a percentage of sales,” he said.
In Google’s takeover of DoubleClick, “people are raising privacy issues in the context of an antitrust query,” said Varney, identifying herself as a longtime attorney for DoubleClick. Alarms about Google acquiring “DoubleClick’s data” on consumers are misplaced, because DoubleClick doesn’t hold that information, she said. “I would be concerned about Google” on privacy grounds regardless of the acquisition, Varney said. But the deal raises the prospect of Google serving graphical product ads responsive to searches for disease names, Chapell said: “It becomes very concerning [when] one company has access to that storage of data.”
Zango’s Nov. 2006 settlement with the FTC will make it hard for any company to distribute downloads of applications consumers haven’t sought, Varney said. The decree’s mandate for “clear, conspicuous, unavoidable notice and consent” will make it a challenge to get anyone to click assent, she said. There’s a little-recognized problem with “censorship” by antispyware companies that enable blocking based on unreasonable criteria for malware, with “no recourse” for companies victimized except suing, Chapell said. Varney agreed.
A Democratic administration in Washington would mean “much more aggressive enforcement” in consumers’ behalf, Varney said. But there’s no indication that Congress is ready to become more active than it has been, she said: “There’s always a bill kicking around, never enacted.” A light govt. hand can’t protect privacy, Varney said: “There is absolutely no marketplace for privacy. People will sell their mothers’ life history for 10 cents off a Big Mac.”
Other points: (1) The CAN-SPAM Act has succeeded mainly in pushing spammers offshore and helping people unsubscribe to unwanted e-mail, Varney said. The FTC goes after only big companies “who slip up,” she said. “Mobile so far has done a pretty good job” on spam, Chapell said: “SMS messages are opt in.” But it’s questionable whether that will remain true when all-you-can-eat data plans become available for $3-$5 monthly, he said. (2) The FTC will require conspicuous disclosure of product placements in all media, based on principles it has established for word-of-mouth advertising and other endorsements, Varney said.