Recent enforcement decisions within the digital advertising industry indicate a shift in—and a clarification of—the required disclosures for companies engaged in interest-based advertising (IBA).
Further, these decisions suggest that companies that comply with the digital advertising industry’s IBA self-regulatory principles should expressly affirm such compliance in their privacy policies.
Some quick background: IBA is the collection of information about users’ online activities across different websites or mobile applications, over time, for the purpose of delivering online advertising to those users based on those activities. Although IBA is an important part of the online eco-system, if not done right, it can raise privacy concerns among consumers, who may feel that they are being spied upon by advertisers.
The Digital Advertising Alliance (DAA) has worked to ensure that IBA is done right. The DAA is a consortium of media and marketing associations that, in an effort to ward off legislation, has designed and implemented a self-regulatory compliance regime that seeks to address the Federal Trade Commission’s (FTC) IBA notice and choice expectations. The principles underlying this compliance regime are set out in the DAA’s Self-Regulatory Principles (“DAA Principles”). The DAA enforces these principles through the IBA accountability program, run by the Council of Better Business Bureaus and the Direct Marketing Association.
The DAA self-regulatory program is, at its heart, a notice-and-choice regime. In short, to facilitate such notice and choice, the DAA provides an advertising option icon to be placed in or near an online interest-based ad. By clicking on the icon, a consumer is sent to a landing page that describes the data collection practices associated with the ad and provides an opt-out mechanism.
The Recent Decisions
In its recent enforcement actions, the IBA accountability program appears to have exported this manifestation of the enhanced notice requirement to mobile applications, notwithstanding the provisions of the DAA’s guidance on the Application of Self-Regulatory Principles to the Mobile Environment, first published in 2013.
That guidance expressly provides that app publishers (i.e., “first parties”) that permit third parties to collect information for IBA purposes must “provide a clear, meaningful, and prominent link to a disclosure that either points to a choice mechanism or setting that meets Digital Advertising Alliance specifications or individually lists such Third Parties.” This notice must be provided in two separate locations:
- Either prior to download (e.g., in the app store on the application’s page), during download, on first opening of the app, or at the time cross-app data is first collected; and
The other accountability program decisions, Bearbit Studios and Top Free Games, reaffirm this interpretation. In light of these decisions, app publishers may want to revisit how they provide “enhanced notice” of their IBA practices.
Finally, the Mobile Guidance states that first parties should “indicate adherence” to the DAA Principles in their privacy policies. The accountability program decisions noted the absence of this language in the companies’ privacy policies, and the companies appear to have added language to their disclosures to comply with this obligation. Whether a company would want to affirmatively make this representation of its own accord is something that may warrant additional consideration, as the company’s failure to fully comply with such a representation could give rise to a charge of deception under Section 5 of the FTC Act or a similar state law.
In light of these developments, a company engaged in IBA should:
- If engaged in IBA with respect to one or more of its apps, review how it discloses its IBA practices at the point of app download; and