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To Collect or Not To Collect, That’s the Dilemma?

This article was contributed by Adam Snukal, Esq.

Surfed the web lately? Seen a banner promoting a product, service or trip to Ireland you priced yesterday? Serendipity? Luck? Cookies? Yes, it’s those tiny files placed on your computer when you visit a website. Advertisers can now parse through cookies on your computer when you visit certain websites and instantaneously serve up advertisements based on your historical online behavior—“behavioral marketing.” For some, this is a great convenience. For others, like New York State Assemblyman Richard Brodsky, this is invasive and should be stopped unless the consumer has given consent.

Assemblyman Brodsky sees the acquisition of Doubleclick by Google as a step backward for consumers since the combined company could tap into a reservoir of consumer behavior and search data on an individual basis. So he introduced a bill aimed at restricting Internet behavioral marketing—The Third Party Internet Advertising Consumers’ Bill of Rights Act of 2008—that would prohibit advertisers from collecting and using sensitive, personally identifiable information from users online; require websites to clearly and conspicuously disclose behavioral policies and practices; give consumers the right to opt-out of profiling practices; prevent their online behavior from being collected and used to deliver targeted advertisements; and police how advertisers are permitted to merge and synthesize such information with other data (e.g., merging personally identifiable information collected offline with information collected online). Opponents—some of the largest interactive advertising and media companies—have voiced their opposition in a letter to Assemblyman Brodsky, noting, “Time after time, state laws that have attempted to impose this sort of broad Internet regulation have been struck down by the courts, doing nothing more than making taxpayers bear the expense both of defending the lawsuit and paying the successful plaintiffs’ attorneys fees.”

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Useless But Compelling Facts – April 2008

Anyone notice the TYPO last month? Want a prize? Dig out last month’s issue (March 2008). The first five win. Ah, but now back to this month: did you know Charlie Chaplin once won third prize in a Charlie Chaplin look-alike contest? But again I digress. This month we are curious as to why so many children’s toy coin banks are in the shape of a pig. Know the answer? Send it to me.

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Useless But Compelling Facts – March 2008 Answer

Last month we asked you to identify the nation that is the oldest democracy on earth. This prompted a variety of answers, since nation, as many of you pointed out, could include the “Six Nations of the Iroquois” (Mohawks, Oneidas, Onondagas, Cayugas, Senecas, and Tuscaroras). It might also include the Republic of San Marino, founded in the 4th century A.D. by St. Marinus who fled to escape Christian persecution, or the world’s oldest democratic kingdom established in Kalinga in Northern India approximately 300 B.C.—alas no more. Of course one of our astute readers noted if “oldest” also meant continuous it would put the Isle of Man in the running—its Parliament has been continuously operating since 979 A.D. But after all is said and done (and more said than actually done), we award this month’s prize to Al Teich at the American Association for the Advancement of Science in Washington, D.C., who correctly noted that Iceland, whose parliament (the Althing) was formed by the Vikings in 930, is the oldest democracy still in operation, and who actually visited Thingvellir, the Icelandic site of the first democratically elected parliament.

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It’s a Dyanmic Environment Out There: Yes, You Can Still Avoid Being a Target

Most of us know the law tends to lag behind the marketplace. It is in the nature of most legal systems to try and balance statutory and regulatory authority—which makes rules based on experience or potential issues that will apply to future conduct—with judicial and regulatory decisions—cases that are adjudicated, create precedent and help shape the contours and boundaries of what is or is not permissible behavior within the statutory authorities.

In such a framework, we are often asked to counsel clients as to what is or is not acceptable when there may be little law, few regulations and sometimes no precedent. What to do? Well, as you may imagine, there is no simple answer. But there are some guideposts. A key guidepost is to consider common sense, best practices and some lessons learned from analogous legal precedent.

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Videogame Advertising to Hit the $1 Billion Mark

According to a report in Media Week, advertising spending for advertising in videogames will reach about $1 billion by 2012. Advertising in video games can take a number of forms: in-game advertising, which is preformatted ads that appear within the game itself; advergames, which are games constructed around a particular brand or product in order to highlight and promote that product or brand; context-sensitive or dynamic advertising, which is similar to in-game advertising, but rather than static advertisements, can be contextually modified in a number of ways depending on when, where and how the in-game scene is viewed. Most of that growth is projected in the casual, online, web game world catering to a broader audience than hard core console gamers. The logic is that people are more willing to accept advertising in return for free game playing on the web; and absent a dynamic Internet connection with more user acceptance than is evidenced to date, console gaming provides fewer opportunities for placing context sensitive or behavioral advertising.

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Online Deceptive Ads Cost Millions

To settle FTC charges of deceptive advertising, ValueClick (and its subsidiaries—we’ll just use ValueClick, for short) agreed to pay $2.9 million. In addition to the civil penalty, among other things, ValueClick agreed to conspicuously disclose costs and obligations associated with “free” products. ValueClick is also precluded from making any deceptive claims about the security of a consumer’s information collected by its websites. The FTC charged that ValueClick attracted web traffic using deceptive e-mails, online banner ads and pop-ups claiming individuals were eligible for “free” gifts, but instead were required to plow through and participate in tiresome and potentially expensive third-party offers in order to receive the “free” products. With respect to the security of consumer information, ValueClick’s privacy policies represented that customer information was encrypted—but that either there was no encryption, or a non-standard, insecure form of encryption was used. The proposed order would require ValueClick have a comprehensive security program and obtain independent thirdparty assessments of their programs for 20 years. This is not the first time the FTC has brought an enforcement action against “lead generating” companies, and certainly among a string of cases relating to the data security and information security practices of companies handling non-public consumer information.

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Upcoming Events

Joseph I. Rosenbaum will be speaking at the Virtual Worlds Conference in New York (April 3–4) on the subject of Marketing to Children in Virtual Worlds: At Play or As Prey? exploring the emerging use of virtual worlds to advertise and market, exploit, educate and entertain children. Joe will also be a panelist at the 40th International Advertising Association Conference in Washington, D.C. April 7 on the subject of Mobile Mayhem.