IAB Says FTC Lacks Authority To Issue Privacy Rules

The Federal Trade Commission should scrap its “misguided” effort to issue online privacy rules, the industry group Interactive Advertising Bureau says.

“If privacy will be federally regulated, such efforts should start with Congress -- not the FTC -- particularly as Congress is actively considering privacy legislation,” Lartease Tiffith, executive vice president for public policy at the trade group says in comments filed Monday with the agency.

He adds that the FTC's request for comments about potential rules suggests that the agency intends to issue regulations beyond its authority.

“As a result, it would be misguided for the FTC to proceed with a rulemaking,” he writes.

The industry group's objections come in response to the FTC's “advance notice of proposed rulemaking,” which seeks input about a broad range of issues relating to so-called “commercial surveillance” -- a term the ad industry considers pejorative.



The agency defined “commercial surveillance” as "the collection, aggregation, analysis, retention, transfer, or monetization of consumer data and the direct derivatives of that information."

The FTC said when it launched the initiative that recent actions, as well as media reports and public research “suggest that harmful commercial surveillance and lax data security practices may be prevalent and increasingly unavoidable.”

The agency added that the current approach to online privacy -- which involves notifying consumers about data collection and seeking their consent on an opt-out or opt-in basis -- may be inadequate.

“The permissions that consumers give may not always be meaningful or informed,” the FTC stated, adding that many people don't have the time to review lengthy privacy policies and their periodic updates.

The Interactive Advertising Bureau argues in its comments that the FTC only has authority to regulate practices that are “unfair” or “deceptive,” and that the collection and use of online data for advertising doesn't fall into either category.

“There is not evidence to suggest that data-driven advertising, like 'personalized' or 'targeted' advertising, could reasonably meet the definition of either an unfair or deceptive act or practice,” Tiffith writes. “Consumers are well aware of the fact that data is collected for advertising purposes and they are not reasonably deceived by such data collection and use.”

The organization adds that targeted advertising enables companies to offer online content and services.

“Before the ad-supported internet, for example, consumers had access to a limited set of newspapers, radio stations, television stations, educational opportunities, and shopping experiences based on where they happened to live,” Tiffith writes. “Now, consumers have access to tens of thousands of content publishers, e-commerce options, and online services across multiple channels -- unlimited by geographic constraints.”

Other ad industry organizations are expected to also weigh in against new regulations, but privacy advocates as well as some Democratic lawmakers have urged the FTC to move forward.

Last year, for instance, dozens of watchdogs including Free Press, the Electronic Frontier Foundation and the Electronic Privacy Information Center asked the FTC to pass rules that would curb the collection and use of data for commercial purposes.

On Tuesday, Free Press vice president of policy Matt Wood said the organization “clearly disagrees” with the Interactive Advertising Bureau's position “on the FTC's authority, and on the potential for the FTC to rein in abusive practices that are indeed unfair and deceptive."

The FTC is accepting comments through November 21.

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