The Federal Trade Commission released guidelines regarding the self-regulatory principles for behavioral advertising on the Web and consumer privacy advocate groups claim the document is meaningless.

Consumer privacy groups have been encouraging the FTC to investigate privacy threats and wrong practices targeting children, adolescents and multicultural consumers for years now. The FTC's -- Self-Regulatory Principles for Online Behavioral Advertising" report is a response to those demands.

"I think that the issue of self regulation has been on the FTC's plate for ten years and it's disturbing that only one commissioner chose to question the self regulatory model," said Pam Dixon, executive director of the World Privacy Forum, Washington.

"I think my disappointment in the FTC approach is there weren't specific renegotiations on the self regulation model," she said .

The FTC suggested that consumers could opt-out from being tracked online by each marketer, individually. The commission also brought up the possibility of a Do Not Track List, similar to the Do Not Call List that was created to control the calls of telemarketers.

"If the consumer has to opt out from each and every marketer it becomes just too much," said Chris Hoofnagle, director of information privacy programs at the Berkeley Center for Law and Policy Center, Berkley, CA. "The FTC failed to address the clearest examples of sensitive information and that there is certain user data that should never be used for targeting."

Mr. Hoofnagle said healthcare, social security or other government-issued identification numbers, financial and precise geographical information should never be used for targeting.

In the FTC's report the consumer watchdog said that companies should provide reasonable data security measures so that behavioral data does not fall into the wrong hands, and should retain data only as long as necessary for legitimate business or law enforcement needs.

"The key theme underlying this guidance is the need to balance the potential benefits of the various practices covered by the principles against the privacy concerns the practices raise," the FTC document says.

"Among other things, staff considered consumer expectations regarding the practices; the extent to which the practices are transparent; the potential for consumer harm; and the need to maintain vigorous competition in the online marketplace and avoid stifling innovation," it says.

But the consumer privacy advocates believe the FTC's guidelines are meaningless because they don't provide any actual guidance.

The advocacy groups agreed that the FTC report does not address children and the way behavioral advertising affects them.

"The commission's report does not heed the concerns we have been having," said Cory Wright, senior counsel and adjunct professor at Georgetown Law. "The policy is not meaningful.

The advocates claim that children and teenagers are not able to comprehend what happens when their information is being collected.

"The document fails to define children in terms of what age group can be referred to as children," Ms. Wright said. "The FTC says affirmative consent will work but does not go into detail about what that means.

"The guidelines don't go far enough to protect kids," she said.

According to the FTC guidelines the differing perspectives on how best to provide consumers with effective notice and choice highlight the complexities surrounding this issue.

The FTC staff recognizes that it is now customary to include most privacy disclosures in a Web site's privacy policy.

Unfortunately, as noted by many of the participants at the FTC's November 2007 Town Hall, privacy policies have become long and difficult to understand, and may not be an effective way to communicate information to consumers.

This is especially true in the case of children.

"This reports correctly points out that today there is a fine line between what advertising can and cannot do with behavioral data," said Alex Moukas, CEO of Velti, London. "As a protective body the FTC has every right to advise companies on safe business practices and therefore make that line crystal clear.

"But as an industry, although not directly named in the report, mobile advertisers and marketers have a responsibility to do the governing work ourselves, we cannot solely rely on the FTC to watch everything that we do," he said.

A number of Town Hall participants also criticized existing self-regulatory efforts. Specifically, these participants stated that the NAI Principles had not been effective to address the privacy concerns that online behavioral advertising raises.

This isn't the first time the FTC has been attacked for lack of protection.

On Jan.14 the Center for Digital Democracy and the U.S. Public Interest Research Group joined forces and petitioned the FTC to investigate mobile marketing practices (see story).

The two groups called on the agency to conduct an investigation into mobile marketing privacy threats and wrong practices targeting children, adolescents and multicultural consumers.

Jeffrey Chester, executive director of the Center for Digital Democracy, Washington said that the basic business model for mobile marketing is the adoption of behavioral targeting and marketing and now location is a part of the model as well.

Mr. Chester said that the idea that companies have profiles of mobile consumers raises privacy issues.

The organizations claimed that the FTC has failed to address the unique threats to privacy and consumer welfare.

The jointly filed petition asks that the FTC require true notice and disclosure of data collection on mobile devices.

According to the complaint, consumers don't really understand what they are getting themselves into.

An FTC Town Hall held in May 2008 on the mobile commerce marketplace discussed consumers' ability to control mobile marketing applications, the challenges of effective disclosures given the size limitations in the mobile context, marketing to sensitive groups, and the developments of the next generation of mobile-based products and services.

However, the FTC's guidelines did not specifically touch on mobile marketing enough.

"Considering mobile marketers use behavioral targeting to better understand their users, this issue applies to that industry as well," Mr. Chester said. "I think that the big news is that our complaint helped underscore with the commission that mobile marketers can't just beef up their privacy policies and think that will be sufficient in protecting the mobile consumer's rights to privacy.

"Mobile marketing needs a unique approach about informing users on data-collection techniques and need to think about kids and adolescents," he said. "Mobile marketing is now on the FTC's radar screen. The mobile industry needs to reexamine privacy issues and empower users with knowledge otherwise the potential golden goose of mobile marketing can lay an early egg."

Several companies requested guidance regarding the form and content of notice on mobile devices, on "Web 2.0," and through ISPs -- and questioned whether a uniform or standard approach can be created.

Privacy advocates raised questions regarding the mechanics of providing notice and choice in the Web 2.0 world, where a consumer may use several different third-party applications on a single, unrelated host Web page.

Some advocates raised issues regarding appropriate notice in the mobile context.

Others stated that, as proposed, the transparency and control principle would exclude certain business models, including where an ISP collects, or allows a third party to collect, consumers' online data.

"The announcement today of a mixture of self regulation and opt out still falls short of the FTC stepping up and protecting consumers," said Lily Coney, associate director of Electronic Privacy Information Center, Washington . "The tracking of online behavior of consumers needs to be transparent to consumers.

"Technology is power," she said. "The more knowledge they have of what marketers are doing the better they can protect themselves. The challenge is that the private data collected is opaque and sensitive information has not been adequately defined.

The advocates all agreed that the FTC has a role and responsibility to bring clarity to all this.

The end consumer needs to see some value for exchanging data as well.

"It's always going to be a trade off," Mr. Moukas said. "You've got to educate the market. There is always so much you can do with additional data but there is always the backlash."

Advocate groups also said that the current self-regulatory practices do not have the consumers' best interest in mind. These practices don't have the consumer's best interests in mind.

Four marketing and advertising industry associations have stated their continuing commitment to work together to develop a cross sector set of privacy principles for online behavioral advertising in order to respond to the challenge issued today by the Federal Trade Commission for comprehensive industry self regulation.

The cross-industry group represents the first time the entire marketing and media industry has come together to develop a cohesive and far-reaching self-regulatory effort for interactive advertising.

The associations are the American Association of Advertising Agencies (4A's), the Association of National Advertisers (ANA), the Direct Marketing Association (DMA), and the Interactive Advertising Bureau (IAB). The Council of Better Business Bureaus (BBB), a leading organization dedicated to advancing marketplace trust, is also part of the effort.

The joint industry task force supports the FTC's goal of a comprehensive and effective self-regulatory program that protects both consumers and businesses engaged in interactive advertising.

The group will continue its engagement with policymakers, a broad cross section of businesses, consumers and other important stakeholders as it evaluates important public policy issues that have been raised regarding online behavioral advertising.

The associations look forward to reviewing the current FTC principles released today, having already launched proactive efforts in areas of self-regulation set forth in the FTC's initial self-regulatory principles issued in December 2007, including education and transparency, consumer notification and choice, data security, and self-regulatory enforcement.

The associations have come together to address concerns about the use of online consumer data for behavioral advertising purposes while preserving the innovative and robust advertising that supports the vast array of free online content available to consumers, and what has become an important and growing industry for the U.S. economy.

The group recognizes the importance and responsibility of effective self-regulation in the evolving area of online and behavioral marketing and applauds the FTC's continued commitment to industry self regulation.

"We don't have any issues with the FTC guidelines," said Mike Wehrs, president/CEO of the Mboile Marketing Association. "If anything we are relieved that the FTC has faith in our industryand believes it should continue to self-regulate.

"Although the guidelines don't specifically cover mobile, they do apply," he said. "People need to know what they are getting into and communication is key. What the FTC did was clarify some ambiguous points from previous guidelines."

What a few members of the industry are currently doing with mobile behavioral advertising is using the traditional direct marketing techniques of casting wide nets and seeing what happens.

In a mobile context this is simply spamming, end of story, according to Mr. Moukas.

"To avoid this successful mobile marketers are already following strict internal rules governing their practices of transparency, opt-in/opt-out, data security, direct consent and avoiding sensitive data each of which serve as pillars from this report," Mr. Moukas said.

Every mobile campaign that runs on the Velti network requires an opt-in.

As a global company operating in more than 25 countries, Velti adheres to a high level of self-regulation.

For the industry, consumer privacy is essential to the health of mobile marketing.

"If users choose to opt-in to a program after seeing an offer, they should always have the option to opt-out," Mr. Moukas said. "Mobile marketing needs to be useful and provide consumers with content that they need, when they need it, without being intrusive.

"What this report doesn't address is what we as an industry need to do a better job of pressuring the few to follow the lead of self-regulation," he said.

To view the full FTC guidlines document click here.