After six months of investigations the Office Fair Trading has published its long awaited “Market Study” on “Online Targeting of Advertising and Prices.” Conclusions? One practice under the spotlight doesn’t necessarily seem to be happening and the other doesn’t seem to be causing that much consumer concern. Oh dear reports Stephen Groom.
Topic: Online advertising
Who: Office of Fair Trading
Where: London
When: May 2010
Law stated as at: 28 May 2010
What happened:
After seven months of investigations and deliberations, the Office of Fair Trading ("OFT") has published "A market study" on "Online Targeting of Advertising and Prices" ("Study").
The Study is one of two related exercises announced in October 2009 by the OFT. The other was to focus on online pricing practices generally including price comparison sites. The results of this were promised for "Summer 2010" and one imagines these will be appearing soon.
Meanwhile back at the "Online targeting of advertising and prices" Study, the second topic, the online targeting of prices ("OTP"), was in some eyes a strange move.
"Strange" because as of October 2009, the practice under the spotlight, namely online sellers quoting different prices or targeting different postcodes depending on the perceived ability of the consumer to pay as derived from tracking technology, had not attracted anything like the headlines and general heat and light generated at that stage by "online behavioural advertising."
Be that as it may, the OFT considered this a sufficiently prevalent and worrying practice to be up there with "OBA" as a potential source of consumer detriment. The watchdog headed by the UK's highest paid civil servant also regarded a study of OTP to be so urgent that it was expressed into a slot alongside OBA. An odd decision when it could have easily been rolled into its more logical place alongside the other online pricing practices to be investigated in the market study report to be published slightly later, in Summer 2010.
"Not happening" finding re: online targeting of prices
So what did the Study come up with so far as OTP was concerned?
In sum, the OFT said it had been able to come up with "no information about firms that are currently using past online behaviour to alter list prices or restrict the product range." Accordingly "online price targeting was a possibility but not yet a reality in the UK-except in the form of largely innocuous discount offers."
No surprises here, then and the OFT's rather lame suggested next step is for the Information Commissioner's Office to include "targeted prices using web browsing data in their Code of Practice and [to formulate] a clearer view on when consent is necessary and where notice to individuals suffice (sic)."
Turning to the main course, the study of OBA, the Study's findings here are again a little limp and in at least one case, distinctly strange again.
Visiting a website could be "transactional decision"?
The OFT believes there may be scope for an argument that a decision to view a particular website is a "transactional decision" as defined by the Consumer Protection from Unfair Trading Regulations 2008 ("CPRs").
The significance of this would be, according to the OFT, that if the site had been transparent about the behavioural tracking that was going to happen, consumers would not have visited a particular website, whereas in fact they did visit. So the punter has taken a transactional decision as a result of a misleading omission of material information and therefore a criminal offence has been committed.
Interesting. But what about that word "transactional"? The CPRs define a "transactional decision" as
"any decision taken by a consumer concerning (a) whether how and on what terms to purchase, make payment in whole or in part for, retain or dispose of a product; or (b) whether, how and on what terms to exercise a contractual right in relation to a product."
The author is struggling to see where a decision to visit a website, without making a purchase, could come within either of limbs (a) or (b).
Not surprising then, that having raised this as a possibility, the OFT concludes that "Current practices may not breach the CPRs though each case will would have to be assessed according to the facts." Hmmm.
So is it opt in or opt out for OBA?
So do the Data Protection Act 1998 ("DPA") or the Privacy and Electronic Communications Regulations 2003 ("PECRs") offer any more obvious solutions to those seeking a clear steer on where they would stand legally in using OBA?
On the DPA front, the OFT cites the ICO's pronouncement that information about browsing behaviour should generally be treated as personal data. Therefore, the OFT reminds us, firms will have to inform consumers about such data collection, keep the data secure and must only use it in a way that is fair to consumers. No new insights and nothing clear on which way to opt here.
Focusing next on the PECRs, the OFT reminds us that consumers must be informed when a tracking system collects information about them and given an opportunity to refuse their continued use.
In some cases it will be acceptable, the OFT says, to put the disclosure in a privacy policy and give an opportunity to opt out. In other cases, however, such as deep packet inspection OBA (tracking at ISP level and probably not now practised in the UK despite Phorm's best efforts) this will not be sufficient, says the OFT. So again no real clarity here but a general genuflection in the direction of "opt out" for all but the most extreme form of OBA.
Self regulation emphasis
So having noted no major groundswell of consumer anxiety over the practice, the Study falls back on self regulation of OBA on an opt out basis as its strongest recommendation at this time, the threat being as ever that if this does not work and consumer unease mounts, further legal controls may be wheeled out.
The self regulation given most encouragement is that offered by the Internet Advertising Bureau and its opt out- based Good Practice Principles for OBA. However the OFT is concerned about transparency and the IAB's reliance on privacy policies when the latter are clearly only read by 10% of web surfers and never read by 50% of them.
The OFT therefore encourages the IAB to enhance awareness by (1) developing "clear and notices (sic) alongside adverts" (as per the "i" icon trial currently being launched in the USA and reported in marketinglaw.co.uk) and (2) pushing for practices that make opting out easier.
Why this matters:
Although the OFT Study is an enlightening summary of the practice of OBA and relevant legal and regulatory concerns at the start of the second decade of the 21st century, those looking for a tough, sabre-rattling stance from the OFT will have been disappointed.
To put it another way, Phil Lee, lead author of Osborne Clarke's second international OBA law survey Report available also on marketinglaw.co.uk, comments as follows:
"The OFT's report suggests that, by and large, most consumers are either in favour of or unconcerned by online targeted advertising, mirroring findings of Osborne Clarke's own recently-published global OBA report. However, while the OFT supports the IAB's welcome efforts to educate consumers and promote effective self-regulation, it has said that more needs to be done to enhance consumer transparency and to hold non-compliant advertisers to account. In effect, it has drawn a line in the sand and warned that advertisers who cross this line can expect to feel the OFT's enforcement wrath."
