Activists Call for Redefining ‘Unfair, Deceptive’ in Mobile Ads
Online marketers announced themselves ready and willing to regulate themselves Tuesday, just as consumer advocacy groups asked the Federal Trade Commission not to follow the same ineffectual path with mobile marketers that they said it took with online marketers. A complaint by the Center for Digital Democracy and U.S. PIRG said the FTC must act now to rein in mobile marketing before practices that should be labeled unfair and deceptive are so well entrenched they're impossible to stop. “The commission cannot continue to sit idly by and wait -- as it has done with the concerns over privacy raised by online advertising in the past,” the complaint said.
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The complaint asked the FTC to “require true notice and disclosure,” including spelling out how consumer consent should be given, “redefine ‘unfair and deceptive'” while examining the relationship between mobile marketers and carriers, review industry self-regulation and create a task force that would report annually and “protect youth from unfair or deceptive practices.” It asked the FTC to focus an investigation on behavioral targeting, location-based targeting, user tracking, audience segmentation and data mining.
The incoming Obama administration knows better than most how effective mobile marketing can be, yet even the campaign team never fully dealt with the data-collection issues it created by gathering millions of names with contact information, said Jeff Chester, the Center’s executive director. He said he expects the new administration to take a pragmatic approach to regulation, but an increasing number of consumer groups are concerned about behavioral advertising.
Marketers have created sophisticated systems that create profiles of people based on their sex, political affiliation and even relationships on Facebook, Chester said, yet most people are unaware of these practices. There’s nothing inherently wrong with getting ads tailored to the recipient’s tastes, but people must understand how the system works and be able to control it, he said. A person might not mind, for example, if the New York Times creates a profile of his information but might not want McDonald’s to follow suit, he said. “We want the system to work, but we want to do it in a way that allows commerce to thrive but protects consumers’ autonomy and privacy,” he said. Saying advertisers have called location-based targeting the “Promised Land,” the complaint warns, “Unfortunately, without adequate oversight and regulatory safeguards, that Promised Land for mobile marketers could soon become Armageddon for consumer privacy.”
But a spokesman for the Interactive Advertising Bureau, which represents companies that sell online advertising, said behavioral advertising has been around for a decade and no harm to consumers has been shown. The worst that consumer advocates can dredge up, he said, is “they say it’s creepy.” Attention has grown because of consolidation, the growth of the industry and some new technology, the spokesman said.
The FTC complaint doesn’t point to specific problems, said Mike Wehrs, president of the Mobile Marketing Association. “There’s nothing specific listed. It’s a list of worries.” The association and its 720 member companies have shown responsibility, he said, by posting a consumer best-practices document on its Web site and including a page for complaints about advertising. Its members won’t succeed if they annoy customers, he said. The group would welcome a factual discussion with the advocacy groups, Wehrs said.
The Internet ad bureau joined with the American Association of Advertising Agencies, the Association of National Advertisers and the Direct Marketing Association to announce Tuesday an industry task force to develop self- regulatory principles for online advertising. The effort is noteworthy for including ad agencies, the bureau’s spokesman said, because that group hadn’t taken part in industry discussions before. A news release said the task force will get involved with policymakers, business and consumers. But first, the industry must set its position, the spokesman said.
The bureau and the Mobile Marketing Association agreed on the importance of consumer education. The association will push a consumer awareness campaign this year, Wehrs said. The bureau spokesman said consumer notice is difficult because no single model works everywhere, but he added that the group will probably consider creating standardized language, making forms more accessible and showcasing best practices. EBay, for example, provides notice in its ads, he said. “It doesn’t work for every business model, but it’s a neat idea,” he said.
Chester said the online advertisers’ task-force announcement simply shows the industry is “in a bit of a panic” and trying to stave off regulation. Online advertisers have done harm by targeting people for subprime mortgage ads, Chester said. Mobile advertisers target vulnerable groups like young people and minorities, particularly Hispanics, he said. As people increasingly use their phones for personal transactions that include health or financial information, safeguards will be all the more important, he said. Wehrs, however, said most companies abide by best practices. The industry as a whole has behaved responsibly, he said, and the few bad apples that could be used as examples aren’t even mentioned in the FTC complaint. There’s no need for additional regulation, he said, because officials can pursue the bad actors with existing laws and regulations. Adding regulation would impose time and financial costs on advertisers, he said.