Groups file FTC complaint over cell phone privacy

Behavioral advertising poses privacy risk to users, say consumer advocates

You may not know it yet, but your cell phone is becoming the new battleground in the war between consumer rights groups and the behavioral advertising community.

The Center for Digital Democracy (CDD) and the U.S. Public Interest Research Group (PIRG) today filed a complaint with the Federal Trade Commission (FTC), asking the agency to investigate what the groups claimed were escalating privacy threats posed to consumers by advertisers targeting mobile users.

In a 52-page complaint, the two groups claimed that advertisers had begun to migrate to the mobile world many of the same consumer data collection, profiling and behavioral targeting techniques that have already raised privacy concerns for online users.

What makes the trend particularly pernicious is the fact that mobile devices are almost always specific to one subscriber, allow for consumers to be tracked in real time and are capable of supporting multiple communication types such as voice, data and multimedia services. Advertisers are taking advantage of all this to turn mobile devices into "portable behavioral tracking" tools for the purposes of delivering highly targeted and contextual marketing messages, the groups noted in their compliant.

The CDD's executive director, Jeffrey Chester, told Computerworld that in the process, important privacy issues related to disclosure, collection and use were being overlooked. "The mobile phone is a very powerful surveillance tool," Chester said. "But the average user has no idea what information is being collected, how it is being used or shared [by advertisers]."

That's why it is important for the FTC to launch an immediate investigation into the privacy implications of targeted advertising in the mobile marketplace, Chester said. He said the focus should be on identifying practices that threaten privacy, on the opt-in and opt-out procedures available to consumers, and the disclosure that is made available to them.

Focus also needs to be on ensuring that mobile ads meet minimum standards in terms of relaying information that helps consumers make informed decisions, Chester said. This is especially necessary when it comes to mobile ads involving health care-related or financial products, as well as those directed at specific demographics such as teenagers or ethnic minorities, he said.

It was unlikely "that many users fully understand the privacy implications of every discount coupon, free download or ringtone offer that comes their way," the two groups wrote in their FTC petition.

The complaint comes at a time when advertisers are busy deploying what the CDD and PIRG described as a "dizzying array" of branded marketing applications for mobile platforms. Increasingly, marketers are using rich media applications, mobile video, branded portal sites and direct response microsites to deliver customized marketing messages to mobile users, the groups said in their FTC petition.

Several technologies are currently available to marketers that permit targeted and "device-optimized insertion of any type of advertising -- such as images, videos and logos," on any type of mobile consumer application, it noted.

A spokesman for the Interactive Advertising Bureau (IAB), a trade body representing online advertisers from the media and technology space, today said that it will take a look at the FTC petition to "see if it has any merit." The IAB is one of four marketing and advertising industry associations that today announced a joint initiative to develop guidelines to tackle privacy concerns related to online behavioral advertising practices.

A joint task force will engage with the FTC and lawmakers to understand and deal with some of the policy and privacy issues regarding online behavioral advertising that were raised during a two-day FTC town hall-style meeting in November 2007, the IAB spokesman said. The group will work on ways to implement and enforce some of the self-regulation principles the FTC had proposed in shortly after that meeting, he said.

The IAB spokesman said of today's FTC petition that there were already some strong self-regulation programs governing behavioral advertising in the mobile space. But he added, "We will absolutely move our focus to mobile" if the privacy concerns aired by the two groups in the complaint have merit.

Copyright © 2009 IDG Communications, Inc.

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