FTC Claims Online Advertiser Deceived Consumers Who Wanted to Opt Out From Targeted Ads

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If you’ve ever seen display ads that correlate to your interests, recent searches, or online purchases, welcome to the world of behavioral advertising.

As part of an ongoing effort to protect consumers’ online privacy, the Federal Trade Commission oversees how companies use that behavioral advertising data. And the FTC is not a fan of Chitika, a company that makes money by tracking consumer activities online – maybe even your online behavior.

The FTC recently reached a proposed settlement with Chitika after alleging it participated in a deceptive practice of tracking consumers’ online activities even after they had chosen to opt out of online tracking. Specifically, Chitika’s opt-out lasted only ten days before adding back the tracking cookies.

Tracking What You Want, Not Who You Are

In its defense, Chitika did not collect any “personally identifiable information” — or PII — for ad-targeting purposes. Still, users’ online habits were sold to advertisers, and when consumers thought they had opted out of such online tracking, they were still being studied and analyzed by “big brother” advertisers.

The company called the two-year glitch – which mistakenly set opt-outs to expire in ten days rather than the intended ten years – a “bug” that was corrected thanks to the FTC’s alert.

Chitika’s targeting (i.e., browser data, search engine, and search keywords) enables the company to show relevant ads without collecting data that could identify an individual user. In a statement released by the company, the company said “Chitika believes very strongly in Internet users’ privacy. Its advertising network is built on the idea that you can protect privacy by never collecting PII and actually have a better, more efficient ad product.”

The Settlement

The recently proposed settlement between Chitika and the FTC includes the following requirements:

  • Chitika must not make misleading statements about the extent of consumer data collection.
  • Every targeted ad must include a hyperlink that takes consumers to a clear opt-out mechanism that allows a consumer to opt out for at least five years.
  • Chitika must destroy all identifiable user information collected when the defective opt out was in place.
  • Chitika must alert consumers who previously tried to opt out that their attempt was not effective, and they should opt out again to avoid targeted ads.

Privacy Matters

What do you think?

Was Chitika simply caught unaware that its opt-out system was not protecting consumer privacy rights, or was the company purposely deceiving consumers? Have you ever tried to opt out of websites that try to collect your browsing habits?

After knowing what you know now about Chitika, are you concerned about privacy across the vast open Internet?

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Elaine Rigoli

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

1 Response

  1. June 21, 2011

    […] 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. […]