OFT warns advertisers to obey the law

Online behavioural advertisers risk breaching not only privacy and data protection regulations but consumer protection law as well, warned the Office of Fair Trading (OFT).

Research carried out by the government's consumer rights department showed that although these companies must make it clear to consumers what personal data is being collected and how this is being used, not enough is being done to do this.

Online behavioural advertising uses information about a user's web browsing behaviour to target adverts based on likely interests. This information is usually collected through 'cookie' files, which are placed on a user's computer after a first visit to a website.

it is a legal requirement for firms to give consumers clear information about the purposes of storing a cookie or other tracking system on the user’s computer and to provide people with an opportunity to opt out.

Privacy issues, the possibility for misuse of the browsing data collected and fears that behavioural advertising might result in inappropriate or embarrassing advertising being shown, remained areas of huge concern.

Last year huge concerns were raised after internet service providers, BT and Virgin Media, announced plans to implement Phorm's Webwise behavioural online ad service.

Laws the OFT believe these advertisers risk breaking are the Data Protection Act (DPA), the Privacy Regulations and the Consumer Protection from Unfair Trading Regulations 2008 (CPRs)

It said it will now encourage the Internet Advertising Bureau (IAB), the trade association for online advertising, to work with the industry to ensure they stick to the rules.

Heather Clayton, OFT senior director in the Consumer Market Group said: “The OFT is keen to engage with industry players and consumer groups while behavioural advertising is in its relative infancy, and before targeted pricing takes hold, so that the market develops in a way that protects consumers from bad practice.”

However, if self-regulation proves ineffective, the OFT said either it or the Information Commissioner’s Office (ICO) would take legal action.

It is now hoping to develop a Memorandum of Understanding (MoU) to establish in which circumstances it or the ICO would take enforcement action.

In the event that the MoU covers areas where OFT and Ofcom have overlapping jurisdiction, the OFT and Ofcom would discuss, on a case by case basis, which of them would be best placed to act.