The Secure Times

An online forum of the ABA Section of Antitrust Law's Privacy and Information Security Committee

FTC Settles With Chitika Ad Network Over Deceptive Opt-Out Mechanism

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The Federal Trade Commission announced a proposed settlement today with Chitika, Inc., the operator of an online advertising network, ending Chitika’s allegedly deceptive practices related to the mechanism it provided allowing users to opt out of its online tracking. Chitika offers an online behavioral advertising service which places targeted ads on a publisher’s website and, according to its website, it has over 100,000 websites in its network, including salary.com and yellowbook.com.

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The FTC alleges that the representations Chitika made in its privacy policy regarding visitors’ ability to opt out of receiving tracking cookies were false or misleading. According to the complaint, from at least May 2008 through February 2010, Chitika’s website offered an opt-out from receiving cookies used to track visitors’ activities on websites in its network. After pushing a button to opt out, a user would see a message stating “You are currently opted out”, but the message did not state that the opt-out would only last for 10 days.  The unqualified claims regarding the opt-out allegedly deceived consumers and violated Section 5 of the FTC Act. 
 
Under the terms of the settlement, Chitika is prohibited from making misrepresentations about the extent of its data collection about consumers and the extent to which consumers are able to control the collection, use or sharing of their data. Chitika also agreed to take specific steps to improve the transparency of, and consumer’s ability to control, its collection of consumer data for online behavioral advertising, including agreeing to include a link within each targeted ad that takes users to a page that will allow them to opt out of tracking for at least five years. Additionally, Chitika must destroy all information collected from users obtained during the period the opt-out mechanism only lasted for 10 days. 
 
The timing of the settlement is interesting because it comes several months after the FTC released its privacy report which included a “do-not-track” proposal.  The settlement will likely be considered closely by the online behavioral advertising industry, which has recently developed a self-regulatory program requiring similar links within ads (aboutads.info), and by members of Congress, which have recently proposed do-not-track legislation
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Author: Eric Whisler

Associate at Vorys, Sater, Seymour and Pease LLP.

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