‘Opt Out’ Showdown: FTC Doles Out Final Punishment to Online Ad Company

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The Federal Trade Commission and online advertising company Chitika have reached a final settlement over illegally tracking consumers’ online activities.

You may recall that Chitika and the FTC were at odds over behavioral advertising – you know, that’s when you see display ads that correlate to your interests, recent searches, or online purchases. The FTC accused Chitika of using “deceptive” consumer opt-out mechanisms that violated federal law. Chitika, according to the FTC, tracked consumers’ online activities — even after they chose to opt out of online tracking.

The FTC alleged that, unbeknownst to consumers, the “opt out” lasted for only ten days. As part of its final report, the FTC even created a PDF featuring “Exhibit A” and “Exhibit B” of the alleged opt-out offenses.

A few months ago, they reached a proposed settlement, and after a public commenting period, the FTC published its lengthy final settlement agreement.

Officially, Chitika is barred from misleading consumers about the extent of its consumer data collection. It’s also barred from sharing consumers’ data. It also requires that every targeted ad include a hyperlink that takes consumers to a “clear choice” mechanism that allows them to opt out of receiving Chitika’s targeted ads for at least five years.

Among other things, Chitika is also now on a 20-year probationary period. The final settlement states “this order will terminate on June 7, 2031, or twenty (20) years from the most recent date that the United States or the Federal Trade Commission files a complaint (with or without an accompanying consent decree) in federal court alleging any violation of the order, whichever comes later.”

The 20-year punishment also could be extended if Chitika violates “any provision of the order” during this probationary period, proving that the FTC is not afraid to impose strict rulings when it comes to protecting consumers’ privacy online.

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Elaine Rigoli

Elaine Rigoli is PRIVATE WiFi’s manager of digital content strategy.