The Federal Trade Commission ("FTC") has released a staff report after conducting a series of workshops on cross-device tracking and related issues concerning online and mobile behavioral advertising. The staff report aims to provide recommendations to various companies, including advertising technology companies, publishers and platforms, regarding transparency, security and the provision of suitable options to consumers whose behavior is now increasingly tracked across multiple platforms and devices.
What is cross-device tracking and why is the FTC concerned about the practice?
Cross-device tracking is the practice of connecting a consumer's activity across his/her smartphone, desktop computer, tablet, and other connected devices, in order to link that consumer's behavior for targeted advertising and consumer convenience purposes. Cross-device tracking typically takes one of two forms, and, oftentimes, involves a combination of both. The first, deterministic cross-device tracking, involves instances in which consumers have, for example, used the same log-in information or email address on each device they use. The other form, known as probalistic cross-device tracking, typically involves IP address matching through which an ad platform places a cookie on a consumer's browser and then infers that a device using the same local network also belongs to the same household or consumer. The goal of each form of cross-device tracking is ostensibly for advertisers to target their marketing more effectively such that if a consumer queries a product on his/her home desktop computer browser, the browser can then inform the ads in a smartphone app, etc., used by the same consumer. Additional benefits associated with the practice may include improved fraud detection and account security through detection of use of a new or unusual device, and a more seamless user experience for consumers across their respective devices.
The FTC, however, also highlighted privacy concerns voiced by many consumers, the foremost of which is transparency (consumers are often unaware of cross-device tracking generally, let alone the scope of the practice or the number of entities that may have access to data that is compiled or shared in the tracking ecosystem). Likewise, cross-device tracking practices often leave consumers with limited options to control the collection and use of their data. Accordingly, the FTC has recommended that companies which are engaged in the practice increase their levels of transparency by providing truthful disclosures concerning cross-device tracking and the categories of data that will be collected. The FTC has also recommended that companies offer consumers choices about how their cross-device activity is tracked, to respect those choices (such as opt-out tools) when exercised, and to ensure that consumers affirmatively opt-in to the collection of sensitive data, such as financial and medical information. The FTC has warned that the failure to take these recommended steps may constitute a violation of the FTC Act.
Changing Rules of the Road for Cross-Device Tracking
We have previously blogged about the Federal Communications Commission's efforts to regulate the collection, use and sharing of data in the consumer privacy space. In issuing this report, the FTC has signaled to the industry that it will do the same as it relates to cross-device tracking of consumer behavior. Given the ongoing focus on mobile and Internet data-related practices, it is important to work closely with knowledgeable counsel to craft and implement privacy policies that are not only tailored to the needs of the particular business, but that also provide consumers with the information that they require in order to make informed decisions concerning their personal data and how it is collected, used and shared.