On November 21, 2012, the UK Committee of Advertising Practice (“CAP”) released new rules on online behavioral advertising (“OBA”). CAP is the UK body which writes and maintains the UK advertising codes, which are administered and enforced by the UK Advertising Standards Authority (“ASA”).

The New CAP Rules

The new OBA rules (contained in Appendix 3 of the CAP Code) contain four new requirements for marketers and third parties engaging in OBA. These organizations must:

  1. Provide clear and comprehensive notice on their own website of their collection and use of web viewing behavior, and provide an opt-out mechanism for consumers. (Rule 31.1.1)
  2. Provide clear and comprehensive notice in or around advertisement displays of their collection and use of web viewing behavior, and provide an opt-out mechanism for consumers. (Rule 31.1.2)
  3. Not create OBA that is designed to target children age 12 and under. (Rule 31.1.3)
  4. Obtain prior explicit consent to use “deep-packet” inspection techniques that collect all or substantially all web viewing data for the purposes of OBA. (Rule 31.2)

EU Restrictions on Cookies and OBA

Article 5(3) of the amended EU e-Privacy Directive (Directive 2002/58/EC as amended by Directive 2009/136/EC) requires that users must be provided with “clear and comprehensive information” and must give their prior informed opt-in consent before any cookies are set on their “terminal equipment” (e.g., computer or mobile device). The previous EU cookies rules (the unamended Directive 2002/58/EC) only required notice and an opt-out mechanism. EU Member States were required to implement the new opt-in cookie rule into national law by May 25, 2011.

The Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 implemented the new rule in the UK by the deadline; however, the UK Information Commissioner’s Office (“ICO”) gave organizations a 12-month grace period (which expired on May 26, 2012) to comply with the new rules.

Pan-European Industry Initiative

The new CAP rules are part of a wider pan-European industry initiative, the European Advertising Standards Alliance (“EASA”) Best Practice Recommendation on Online Behavioural Advertising and an EU Industry Framework. The EASA Best Practice Recommendation, released in April 2011, was criticized by the Article 29 Working Party in its Opinion WP 188 as the rules generally require advertisers to provide notice and an opt-out mechanism, which does not reflect the opt-in requirement of the amended EU e-Privacy Directive.

Analysis of the CAP Code

Like the EASA Best Practice Recommendation, the new CAP rules are likely to be subject to criticism as they only require prior opt-in consent for so-called “deep-packet” inspection technologies. The ICO has made clear that opt-in consent is always required, except where the cookies fall within the narrow “strictly necessary” exemption. Further, although CAP envisions that most marketers and third-party advertisers will meet the CAP requirement to provide “clear and comprehensive notice” through “an icon in the corner of the display advertisement,” a small icon may not, in fact, provide users with clear and comprehensive information about the collection and use of their browsing activities since the ICO has previously emphasized that organizations must be “clear, honest, open and upfront about cookies.” Further, the new CAP rules do not apply to OBA on mobile devices, contextual advertising, web analytics, ad reporting or ad delivery, first-party OBA, and the use of OBA in “rich media, in-stream videos online or on mobile devices.” The new rules do not come into effect until February 4, 2013 (almost two years after the change in the law on cookie rules). It should be noted, however, that the new CAP rules explicitly state that they are “not designed to provide compliance with the law.” UK advertisers, subject to ASA’s authority, are therefore required to comply both with the new CAP rules and with applicable UK laws.