Self-regulatory programs in hot seat over effectiveness

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Chrysler Group lets consumers opt out of tracking through a self-regulatory platform
Chrysler Group lets consumers opt out of tracking through a self-regulatory platform

Academic research released last month has prompted more doubt about the effectiveness of online behavioral tracking self-regulatory programs, which lawmakers and consumer privacy advocates had already decried as subpar. 


Researchers at Stanford University's Security Lab found that six online advertising companies, including 24/7 Real Media, AudienceScience and Wall Street on Demand, violated their own privacy policies on the tracking of opted-out consumers. The research team, which examined 64 companies participating in the Network Advertising Initiative's (NAI) self-regulatory program, also found that 32 member companies complied with consumers' targeting opt-out requests but continued to track behavior. 24/7 Real Media and Wall Street on Demand both said afterwards that they updated their privacy policies.


Susan Grant, director of consumer protection at the Consumer Federation of America, said the study proves the shortcomings of industry self-regulation. "I think it helps to illustrate the difference between what the self-regulatory programs are offering and what people are really looking for," she says. 


The Digital Advertising Alliance (DAA)'s self-regulatory program faces similar scrutiny. Its Advertising Option icon notifies 
consumers if an ad has been served based on their behavior and provides an opt-out mechanism from targeted ads, but its principles don't forbid companies from continuing to track opted-out consumers. 


Car companies are among the "larger players in advertising," says Pat Morrissey, director of product and brand communications at General Motors Corp., which explains why GM and Chrysler Group have promoted their adoption of the Advertising Option icon.


"This system will empower consumers to decide if they want to opt out of behaviorally targeted advertising or continue to have these tailored advertisements marketed directly to them," said Susan Thomson, head of media at Chrysler Group. 


However, consumer privacy advocates said that no matter the consumer-facing brands participating in the self-regulatory programs, they are more concerned about size of the third-party advertising companies' collection and use of consumer data. 


"To the extent that the industry has well known names participating in the program enhances its image, but these are companies you'd expect would be trying to do the right thing anyway," said Grant. "There are lots of other folks that are collecting information for their own use that in many cases are not companies that consumers have heard of."

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