Is 'New' 'Stronger'?: Online Behavioral Advertising and Consumer Privacy Legislation

Posted: 2 Apr 2015 Last revised: 20 Aug 2015

See all articles by Ju Young Lee

Ju Young Lee

Pennsylvania State University

Date Written: March 31, 2015

Abstract

Online behavioral advertising (OBA) or behavioral targeting advertising refers to an online practice that delivers advertising messages to consumers based on data about their prior and real-time online activities. Advertisers can effectively track consumer preferences by having access to diverse personal information gathered online. It is not new at all for profit-making companies to strive to gather personal information so that they can target their advertisements to “right” consumers and in turn minimize advertising waste. Advertisers assert that behavioral advertising can not only boost conversion rates, but also maximize consumer satisfaction; it benefits consumers, as well as causing no harm to consumers. Despite the online advertising industry’s argument, according to a survey conducted by Consumer Reports in 2014, 85% of online consumers oppose the personal data tracking for advertising purposes regardless of whether the data are anonymized or not. In addition, 76% of consumers responded that they saw “little or no value” in targeted ads.

The United States Federal Trade Commission (FTC) has been watching online tracking and behavioral profiling for advertising since the mid-1990s. As there have been considerable privacy concerns raised on the consumer side, the FTC has made many regulatory efforts including its proposals of self-regulatory principles in 2007 and “Do Not Track” mechanism in 2010. These FTC’s efforts, however, have not enabled consumers to effectively control the collection and use of their personal data. Although the U. S. Congress also has proposed legislations of online consumer privacy protection, no proposals have led to a comprehensive privacy legislation yet. As part of an ongoing effort to strengthen privacy regulations, there came two new proposals: one is the White House’s draft of the Consumer Privacy Bill of Rights Act of 2015, and the other is the Congressional Privacy Bill containing the Commercial Privacy Rights Act of 2015. Both industries and consumer advocates have been presenting their evaluations of those proposals since their release. Naturally, companies deplore that they are unreasonably stringent, whereas consumer organizations complain that they are still weak.

Aside from the evaluations by interested parties, this proposed research intends to analyze the two latest proposals in terms of whether they could be an effective measure to resolve the problems and concerns raised by consumers in relation to OBA. Based on a socialist concept of privacy explicated by Fuchs (2012), this study examines whether the new proposals provide sufficient protection for consumer privacy defined “as a collective right of exploited groups that need protection from corporate domination that uses data gathering for accumulating capital, for disciplining workers and consumers, and for increasing the productivity of capitalist production and advertising.”

To define “consumer concerns,” this study analyzes the documents of consumer complaints particularly related to OBA, which include the documents listed in the “Resources for Consumer Concerns about Privacy,” provided by the Consumer Federation of America, the complaints filed with the FTC by the consumer and privacy groups, and prior research on consumer perceptions of OBA. On the basis of the OBA problems extrapolated from these sources, how these problems can be resolved by the new legislation proposals is evaluated. As an additional discussion for a better measure to protect consumer privacy, this study will compare the two proposals with a draft of the European General Data Protection Regulation released in January of 2012 that is considered to be a comprehensive data protection law providing consumers with strong protection from the unauthorized use of their personal data. This study will be a significant addition to the discussions of a pertinent level of consumer privacy protection against online tracking and behavioral profiling.

Keywords: privacy, online behavioral advertising (OBA), behavioral profiling, consumer protection

Suggested Citation

Lee, Ju Young, Is 'New' 'Stronger'?: Online Behavioral Advertising and Consumer Privacy Legislation (March 31, 2015). TPRC 43: The 43rd Research Conference on Communication, Information and Internet Policy Paper. Available at SSRN: https://ssrn.com/abstract=2588237

Ju Young Lee (Contact Author)

Pennsylvania State University ( email )

University Park, PA 16802
United States

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