Online Bussiness | The Office of Fair Trading (OFT) says more fair in online advertising

25May/10Off

The Office of Fair Trading (OFT) says more fair in online advertising

Online behavioral advertising collects information about a web user's browsing habits using 'cookie' files--placed on the user's computer after a first visit to a website--and uses it to target adverts based on likely interests.
The OFT study found that while such advertising offers benefits to consumers such as free access to content, concerns remain about potential privacy issues and misuse of personal data. It added that the spread of targeted pricing, based on previous purchases or geographic location, would likely provoke strong consumer opposition.
The use of such technology by companies such as Google Inc. (GOOG) and Yahoo Inc. (YHOO) has already drawn fire from advocacy groups in the U.S., a group of which last month filed a complaint with the U.S. Federal Trade Commission, urging an investigation into "the growing privacy threats" raised by instant online analysis of users' behavior.

-Tommy Stubbington, Dow Jones & Company

Internet companies are eager to use the vast amounts of data they have about online users to create powerful, personalised ads, which could be sold at higher prices.
However, there is a growing unease among consumers and regulators about potential misuse of private information online. Facebook was recently forced to revise its privacy controls after consumer criticism and Google is under scrutiny by regulators for privacy blunders.
A few internet companies have already tried to find ways to increase transparency. Behaviourally targeted advertisements served by Google, for example, include a label next to them that tells the internet user who has served the adverts and how to opt out. Yahoo is developing a similar policy, but other companies have yet to follow.
So far, the industry has been allowed to self-regulate, with the Internet Advertising Bureau publishing “good practice principles” last year, along with nine internet companies. However, the guidelines were criticised as lax by civil liberties and privacy groups.

-Maija Palmer, The Financial Times

It said the Internet Advertising Bureau's approach to self-regulation goes some way to dealing with consumer concerns, although the rules are less than a year old. It noted that behavioural advertising revenues are between £64m and £95m - a fraction of the £3.35bn total for online advertising in the UK.
To strengthen self-regulation the OFT suggests more transparency about opting out, offering more detail on sensitive information collected and used to target advertising. It also suggests extending the voluntary code to social networking sites and strengthening the board which deals with complaints by getting people from outside the industry to take part.
The OFT's research revealed a mixed view of behavioural advertising from consumers. Forty per cent of consumers were neutral on the subject, 28 per cent disliked it and 24 per cent welcomed it.
The group does express some concerns that targeted pricing could harm consumers. Targeted pricing would identify individual shoppers, either by postcode or by past purchases, that are likely to put up with a higher price than an ordinary punter.

-John Oates

The report finds that, while behavioural advertising may offer benefits to consumers such as, for example, free access to content, there are objections to the practice which centre around privacy issues and the possibility for the misuse of personal data.
To address these concerns, the OFT will encourage the IAB, the trade association for online advertising, to work with the industry to provide clear notices alongside behavioural adverts and information about opting out.
Should industry action prove ineffective, the OFT and the ICO are strengthening the effectiveness of regulation by seeking to agree a Memorandum of Understanding to establish in which circumstances the ICO, or the OFT, would take enforcement action. In the event that the MoU covers areas where OFT and Ofcom have overlapping jurisdiction, the OFT and Ofcom would discuss, on a case by case basis, who would be best placed to act.
The study also examines the prospects for the online targeting of pricing based on previous purchases, browsing behaviour or geographic location. Research suggests that consumer opposition to such practices would be very strong. This has led the OFT to conclude that consumers who knew that targeted prices were being applied would change their behaviour, meaning that failure to inform consumers about the practice could breach the CPRs and in such an event the OFT would consider enforcement action.

-oft.gov.uk

The Office of Fair Trading (OFT) is a non-ministerial government department of the United Kingdom, established by the Fair Trading Act 1973, which enforces both consumer protection and competition law, acting as the UK's economic regulator. The OFT's goal is to make markets work well for consumers, ensuring vigorous competition between fair-dealing businesses and prohibiting unfair practices such as rogue trading, scams and cartels. Its role was modified and its powers changed with the Enterprise Act 2002.

Showing how competitive markets that work well are important for consumers, fair dealing businesses and economic performance; explaining its decisions transparently; promoting compliance by explaining to business what the law is and how the OFT will apply it; promoting consumer awareness and confidence; coordinating effectively with enforcement partners locally, nationally and internationally, and advising government on how to achieve the most effective regime for competition and consumers.

-wikipedia

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