OFT to investigate targeted online ads
The Office of Fair Trading is launching an investigation into how the habits and personal information of internet users are used in targeted and behavioural advertising.
The regulator said it has been prompted to carry out the review because of the need to “update the understanding of consumer harm that arises from potentially misleading advertising and pricing” on the web, according to reports.
The ‘Advertising and Pricing market study’, which could potentially result in an industry code of practice being introduced, will cover several issues surrounding online pricing and advertising, including price comparison websites.
“It will evaluate which advertising and pricing practices are most detrimental to consumers, taking into account the growth of the use of the internet for online shopping, information provision and advertising,” the OFT said.
“We are also considering including the use of personal information in advertising and pricing. In particular, we may look at behavioural advertising where information on a consumer’s online activity is used to target the internet advertising they see.
“We may also examine the practice of tailoring prices to individual consumers on the basis of their personal data.”
Behavioural targeting, in particular targeted ad company Phorm, has come under fire in recent months despite being recognised as an effective way to reach consumers with ads and products they are interested in.
Phorm’s Webwise technology, a controversial system that tracks the internet habits of customers to deliver targeted ads, has been the subject of much debate among privacy campaigners, causing a number of publishers to “opt-out” of the service, including Amazon and Wikipedia.
The company’s secret trial with BT in 2006 and 2007 has also become the basis of a European Commission investigation into the UK government’s failure to protect online users.
In July, BT decided to drop Phorm‘s technology saying it needed to focus on “other opportunities”, although the company’s decision is thought to have been affected by on-going privacy complaints.
Heather Clayton, senior director of the OFT’s consumer market group, said: “The way that businesses advertise and price goods and services constantly evolves, and we need to keep up to date on how consumers view these adverts, and the types of advertising and prices which may mislead.
“Before starting our study, we want to understand from consumer groups, businesses and other organisations which areas they think we should focus on.”