Internet law is a relatively new field of legal practice: state and federal courts and agencies are creating it on an ad hoc basis, attempting to fit the highly specialized disputes that arise from website development, service provider liability, copyright/trademarks, and the professional scope of online businesses and affiliate marketers into preexisting legal frameworks.
Of these jurisdictions, the ones that perhaps have the most effect on the daily life of the culture are those internet law questions that arise in conjunction with Internet businesses. In a very brief period of time, less than 20 years in fact, the Internet has utterly transformed not only the way that goods are bought and sold but also how they’re advertised, promoted and marketed, not just in the United States but throughout the world. If you have an online business or are thinking of setting up an online analog to your existing business, competent internet attorneys are your best guide to this brave new world.
Within the United States, agencies like the Federal Trade Commission (FTC) – a federal agency first founded in 1915 to protect consumers from unfair business practices that include false advertising – have begun attempting to regulate online marketing. In 2009, the FTC issued a set of formal guidelines that had and continue to have a profound affect on the way Internet marketers and advertisers do business. In a 55-page report entitled “Self-Regulatory Principles for Online Behavioral Advertising,” the FTC investigated the consumer privacy issues that arise from tracking an online user’s netsurfing activities in order to customize advertising to his or her interests, and set forth four principles to regulate this practice:
• Transparency and consumer control: Companies are expected to inform consumers when they are participating in behavioral advertising and to provide them with an opt-out mechanism if they do not choose to have their information collected for this purpose.
• Reasonable security and limited data retention: Companies that engage in collecting personal data will only retain that data for as long as necessary for the business transaction it pertains to, and will provide reasonable security measures so that the data they collect is not compromised.
• Material changes to privacy policies: Companies cannot use the behavioral data they collect in a manner that is substantially different from assurances made to consumers when they collected it without obtaining the express consent of those consumers.
• Sensitive data: Companies cannot use information about children, consumers’ health or financial statuses or other sensitive data for behavioral advertising.
The Implications of the FTC Guidelines
Consumer Privacy Controls
Online advertisers have the ability to track consumers’ behavior across time in a way that traditional advertisers can only dream about through the use of a specialized HTTP protocol called cookies which allow vendors, advertisers and other parties interested in usage statistics to embed a piece of text in an end user’s web browser that identifies the end user every time he or she accesses a website.
When an end user logs on to a website for the very first time, he or she may be prompted to provide personal information such as name, email address and interests, all of which is packaged into the cookie and sent to the end user’s browser which stores it for later use. Cookies can also be customized to track end users’ browsing activities.