Online Advertisers Take Note: The Sharks are in the Water

Class action attorneys are setting their sites on online advertisers in the wake of pending online privacy regulations designed to curb online behavioral advertising practices.

Behavioral advertising involves the invisible tracking of tracking consumers’ online activities in order to deliver more highly targeted advertising.  Companies that employ the practice (most notably Google), track consumers’ Web searches, the pages they visit, the items they purchase, and the content they view in order to deliver advertising tailored to an individual consumer’s apparent interests.  Google algorithms also read portions of Gmail users’ correspondence in order to direct what they deem to be appropriate ads.

Congress, the FTC, and self-regulatory groups such as the Interactive Advertising Bureau (IAB) have been attempting to develop standard practices for online advertisers, but it has been difficult to keep pace with the rapid development and deployment of ever more inventive (and intrusive) tracking methods.  The FTC is currently considering public comments on proposed new “Do-Not-Track” behavioral advertising restrictions, and the Obama administration recently followed suit, calling for a universal privacy bill that includes the FTC’s proposals.  The European Union is even farther ahead, having already passed a new privacy directive that will go into effect on May 25, 2011 which requires “explicit” consent before users’ behaviors can be tracked to target advertising.

While legislators, regulatory agencies, and the online advertising industry squabble amongst themselves in their efforts to formulate a workable rules, consumer class action attorneys have turned the heat up several notches by filing numerous behavioral advertising class action lawsuits across the country.

Defendants in these actions include YouTube, Skype, E*Trade, ShopLocal, Google, and Apple, along with retailers such as Nordstrom, Phillips Electronics, Skechers USA, Reebok International, and Amazon.com.  The manner in which these cases play themselves out may or may not influence the final form of the regulations currently under consideration, but online behavioral advertisers should take note of the practices that gave rise to the litigation, and modify their own to stay clear of the fray.

 

 



Author: Seth Heyman
Seth D. Heyman is a California attorney with extensive experience in advertising and marketing law, corporate law, contracts, governmental regulations, international business, and Internet law. He has counseled numerous successful companies, both public and private, and was responsible for regulatory compliance, contract management, corporate governance, and HR best practices for multiple organizations in many diverse industries, including marketing, telecommunications, energy, and technology development. He offers insight and guidance on federal and state direct mail, TV, radio, telemarketing, and Internet marketing laws, as well as online promotions, Internet privacy, data protection regulations, and similar matters.

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