FTC Director Rich: Greater Transparency Needed in Post-Mad Men Era of Online Advertising

The world of the popular television show Mad Men may be glamorous, but according to the Director of the Federal Trade Commission’s Bureau of Consumer Protection, Jessica Rich, it depicts more fiction than fact about modern advertising practices which has moved online and depends on vast amount of customer data.  While speaking at the AdExchanger Industry Preview 2015 on January 21st, Ms. Rich cautioned that online advertisers must be more open and transparent with consumers on how they use, collect, and share consumers’ information in this new marketing paradigm, and warned advertisers that failing to sufficiently disclose or attempting to deceive customers about their data collection and use practices could lead to FTC enforcement actions and a loss of consumer trust.

In noting the vast benefits that targeted advertising holds for consumers, Director Rich stated that consumer privacy has grown from being just an issue of matter of legal compliance “to a C-suite issue – part of a [company’s] broader bottom line strategy as consumer awareness and demand for privacy continues to grow.”  Indeed, Ms. Rich stated that “providing transparency and choices about privacy is increasingly a selling point for businesses” as more consumers are becoming aware of and concerned with online tracking and data collection.  Yet she made sure to highlight the fact that misleading customers about their privacy and data collection practices could land companies in hot water with the FTC, state Attorney Generals, foreign regulators, and class action lawyers.  In pointing to the Commission’s past enforcement efforts, Ms. Rich underscored the flexibility the FTC has to bring enforcement actions against a wide variety of purported privacy violations and that the FTC will eagerly pursue companies that mislead consumers regarding their privacy practices.

Director Rich offered a number of recommendations for advertisers to make privacy part of their business practices and, by extension, to hopefully avoid enforcement actions by the FTC.  Among her recommendations, Ms. Rich suggested companies adopt “privacy by design,” and increase the transparency of their data collection and use by using clearer and more readable privacy policies along with “just-in-time” notices.  Ms. Rich also specifically recommended that the existing online behavioral advertising self-regulatory codes be expanded to cover new forms of online tracking, such as “fingerprinting.”  Ms. Rich also advised companies to be truthful and complete in their data collection and use claims, ensure that all information and choices provided to consumers cover all tracking practices in order to be meaningful and non-deceptive, and avoid using sensitive consumer data for marketing or get opt-in consent.

A full copy of the speech is available here.