What’s the News?

Beginning September 1, 2015, many companies that engage in mobile advertising will be subject to a new level of scrutiny by industry watch dogs. On that date, the Digital Advertising Alliance (DAA), an industry self-regulatory organization, will begin to actively enforce its guidelines for online behavioral advertising (also known as “interest-based advertising”).

Who Does this Apply To?

Generally speaking, the DAA’s guidelines for online behavioral advertising apply to (i) advertisers or advertising service providers that are directly engaged in online behavioral advertising, such as by collecting data about consumers’ online browsing habits across multiple websites or mobile applications; and (ii) website owners that permit online behavioral advertising on their websites or mobile applications or that permit third parties to collect data on their websites for the purpose of online behavioral advertising.

What is Online Behavioral Advertising?

Online behavioral advertising is a form of targeted advertising in which an advertiser or advertising service provider collects data about a consumer’s online browsing habits in order to serve them with relevant advertisements. For example, if a consumer visits the website of Company A to shop for a new bathing suit, they may see an advertisement for Company A’s bathing suit the next time they conduct a Google search for bathing suits or when they visit their favorite news or social media website. If so, it is likely because Company A is engaging in online behavioral advertising.

What is the DAA?

The DAA is a self-regulatory group that establishes and enforces privacy guidelines for the online advertising industry. In July 2009, the DAA published a document called Self-Regulatory Principles for Online Behavioral Advertising (the “Principles”), which helped establish “best practices” for online behavioral advertising. The Principles include a number of recommendations for advertisers, including that advertisers should provide consumers with notice when online behavioral advertising is taking place and give consumers a way to opt-out. In response to these recommendations, many advertisers today provide notice to consumers by displaying the DAA’s AdChoices icon, which signals that online behavioral advertising is taking place:

In 2013, the DAA followed up on the Principles by releasing guidance that related specifically to online advertising in the mobile environment, such as through mobile phone applications and mobile web browsers (the “Mobile Guidance”). The Mobile Guidance emphasizes that the Principles apply consistently across the advertising ecosystem, whether you are operating in mobile or on a desktop, but they also provide recommendations for how specifically to comply with the Principles given the technological and space constraints of the mobile ecosystem. 

So Now What?

When the DAA released the Mobile Guidance in 2013, it noted that it would not enforce the Mobile Guidance until appropriate “consumer choice” tools had been developed that would make it easier for advertisers to let consumers opt-out of online behavioral advertising in the mobile ecosystem. Earlier this year, the DAA announced that these consumer choice tools are now operational (see here and here for more information). As a result, enforcement of the Mobile Guidance will start September 1st. Although the DAA’s Principles have always technically applied to advertising in the mobile ecosystem, as of September 1st, the DAA will be taking a more aggressive approach to enforcement.

What will Enforcement Look Like?

The heavy-lifting of the Mobile Guidance enforcement will fall to two other industry self-regulatory groups, the Better Business Bureau (BBB) and the Direct Marketing Association (DMA). These entities will set up systems to receive consumer complaints. After receiving a complaint, the entities will investigate to determine if the complaint has merit. If so, they can take steps to bring the company into compliance, such as public disclosure of the issue or referral to the Federal Trade Commission or another government agency for regulatory action.
 
What’s the Bottom Line?

Before September 1st, all advertisers should review their behavioral advertising and privacy practices and be familiar with the DAA’s recommendations.