WASHINGTON – A Federal Trade Commission staff report called Wednesday for a do-not-track option for online browsing while pressing advertisers to make their data practices clearer for consumers.

The report, which the agency has been preparing for the past year, is aimed at providing a framework for improving privacy as consumers shop and communicate using the Internet. Data are sometimes collected online “in an irresponsible or even reckless manner,” according to the report.

“Technological and business ingenuity has spawned a whole new world,” said FTC Chairman Jonathan Leibowitz. “The FTC wants to ensure that this thriving marketplace is built on sound privacy practices and consumer choice.”

The do-not-track proposal is aimed at online advertisers’ practice of recording consumers’ movements on the Internet, compiling a profile of their preferences in order to target them for marketing. The most practical way to give options to consumers is through a setting on the computer browser signaling their choices for collecting and using data, according to the report.

Companies may be unwilling to embrace such a proposal given the potential to sell products to people based on their interests, said Lisa Sotto, a privacy lawyer with Hunton & Williams in New York who advises companies on advertising, data and security matters.

“Issue-based advertising really is the holy grail for marketers,” said Sotto. “The ability to speak directly to an audience that is most receptive to your message is very exciting. The idea that people may be able to turn off in droves is a difficult pill to swallow.”

Online advertising revenue swelled to $12.1 billion in the first half of 2010, up 11 percent from the same period a year earlier, according to the Interactive Advertising Bureau and PricewaterhouseCoopers.

A coalition of online marketers and advertisers opposes a federally managed system or a law that would dictate a do-not- track framework, and recently introduced a self-regulatory initiative they say is a step in the right direction.

“Industry needs to redouble its efforts in self-regulation,” said Mike Zaneis, senior vice president and general counsel of the Interactive Advertising Bureau, which represents more than 460 sellers of online advertisers and is part of the self-regulatory initiative led by the American Association of Advertising Agencies and the American Advertising Federation for a total of 5,000 marketers.

Zaneis said 58 companies started complying with an opt-out icon introduced last week letting consumers say they don’t want to be tracked, and that 30 more companies are ready to add the symbol on their websites. “We don’t think a do-not-track law is necessary,” Zaneis said.

Proposals letting online users tell Internet sites not to collect and analyze information about them based on their online history are backed by consumer groups. The idea is based on the do-not-call register that the FTC set up in 2003, letting consumers block telemarketing calls at home.

The report also calls for industry to provide prominent, simple and clear privacy notices and allow consumers to review the data they have collected about them.

 

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