• by Wendy Davis , Staff Writer @wendyndavis, September 11, 2009

Any Web companies that use or plan to use behavioral targeting should know that the Federal Trade Commission has made it very clear that it's patrolling the space for potential privacy violations.

Consider these three recent moves: This summer, the agency hired influential privacy researcher Christopher Soghoian to serve as a technical consultant. Last week, the FTC asked the Federal Communications Commission to consider privacy issues raised by behavioral targeting when formulating a national broadband plan.

And the commission recently finalized a settlement in the Sears "spyware" case -- which involved recruiting paid panelists to participate in a market research study. There, Sears sent emails inviting people to download software and promised them $10 if they kept the programs for at least one month. The emails said the software would track "online browsing" but the FTC found that insufficient to alert people that the programs would monitor nearly all Web activity.

Sears didn't admit to wrongdoing or agree to pay any monetary damages, but said it would destroy all data collected.

Frankly, it's debatable whether the FTC could have won that case had the matter gone to court. Unlike the commission's previous adware actions, it doesn't seem as if people were tricked into downloading the software by the promise of free horoscopes/screensavers/etc., or that it slowed their computers. The sole issue was whether Sears sufficiently explained the nature of its tracking software -- software that consumers were paid for downloading.

Regardless, these recent moves send a clear signal to companies that watchdogs are keeping an eye on them. That's in contrast to much of the last decade, when behavioral targeting companies seemed to pretty much operate without a huge deal of government scrutiny.

Because the companies tended to be tight-lipped about what type of data they were collecting and how they were using it, few outsiders took note. In fact, it was only when companies opened a window into their practices -- as happened with AOL's Data Valdez and Facebook's Beacon debacle -- that many people began taking note of just how much data was being collected.

Now that the extent of data collection is becoming better known, ad companies shouldn't be surprised to see a continued backlash -- by consumers as well as policymakers