A California-based digital advertising company must allow consumers to control their online tracking as a result of a settlement agreement with the Federal Trade Commission.

Turn, Inc.'s privacy policy represented that consumers could block targeted advertising by using their browser's settings to block or limit cookies. But the agency accused the company of using unique identifiers to track millions of consumers, even after they blocked or deleted cookies from websites. By injecting headers (50-character alphanumeric strings) into the unencrypted mobile traffic of Verizon Wireless users, Turn was able to compile profiles of users and serve them targeted ads, the FTC said.

In addition, the agency alleged that Turn misrepresented the scope of its opt-out mechanism, which was limited to mobile browsers and did not block tailored ads on mobile apps.

'Turn tracked millions of consumers online and through mobile apps even if they had taken steps to block or limit tracking,' Director of the FTC's Bureau of Consumer Protection Jessica Rich said in a statement. 'The FTC's order will ensure the company honors consumers' privacy choices.'

The two-count administrative complaint charged Turn with violating Section 5 of the Federal Trade Commission Act by falsely claiming that consumers could block or limit cookies to restrict the company's ability to track consumers and misleading consumers to believe they could use Turn's opt-out mechanism to avoid tailored ads on mobile apps.

To settle the charges, Turn agreed that it will no longer misrepresent the extent of its online tracking or the ability of users to limit or control company use of their data. The company must provide an effective opt-out for consumers who do not want their information used for targeted advertising, and place a 'prominent' hyperlink on its home page taking consumers to a disclosure about targeted advertising.

To read the complaint and consent order in In the Matter of Turn, Inc., click here.

Why it matters: The FTC offered the ad industry two takeaways from the action: first, live up to express and implied claims about consumer privacy, and second, respect consumer choice.