Claria CPO: Web Sites, You're Next

NEW YORK – Behavioral marketing has become a hot topic for legislators and regulators, and adware companies aren’t the only ones that need to watch out. That’s according to D. Reed Freeman, chief privacy officer of adware firm Claria, who gave a keynote address at the Jupiter/ClickZ Advertising Forum in New York.

“Why [is behavioral marketing hot again]? Because consumers are complaining,” he said. “When consumers complain, law enforcement follows.”

Freeman said he expected federal legislation — specifically House Bill 2929, also called the SPY ACT — to pass either this year or next. That bill would require users receive notice and give consent to those who install spyware — defined as “software that can be used to transmit from a computer… by means of the Internet and without any action on the part of the user of the computer…information regarding the user of the computer.” The bill assigns enforcement to the Federal Trade Commission and would pre-empt any existing state laws, including the controversial Utah Anti-Spyware law, which has been preliminarily enjoined from taking effect.

California’s state legislature is also weighing two different anti-spyware bills. The frontrunner, according to Freeman, is Senate Bill 1436, which would regulate the collection of personally identifiable information by “spyware.” It calls for consumers to be notified of data collection outside of a license agreement — in larger type, a different font or color, or set apart by symbols designed to call attention to the notice, and otherwise displayed so a reasonable person would notice it. Freeman said he expects the bill to be voted into law in the coming weeks.

Though the proposed legislation seems specifically aimed at software makers, Freeman cautioned Web publishers using the behavioral targeting techniques that have recently gotten lots of attention in the industry. Freeman contends it’s not enough simply to outline data practices in a privacy policy.

“Some things are so important that they have to be snatched out of a privacy policy and put in front of you so you have to stumble over it before you can go forward,” he said. Describing how a company should decide whether something is important enough to meet that standard, he said, “Would your mother be surprised? If a consumer would be surprised, it needs to be told to them, prior to their ability to take action.”

Freeman pointed to the Network Advertising Initiative’s agreement with the Federal Trade Commission as a benchmark that others could look to for guidance.

“I think that the Internet has really missed a huge opportunity to communicate with consumers how Web sites work and how advertising works,” he said. “I think there’s been some arrogance there.”

Prior to joining Claria in May, Freeman was a partner at Collier Shannon Scott, a Washington, DC based law firm, where he practiced online privacy and advertising law. He is a former staff attorney for the Federal Trade Commission’s Bureau of Consumer Protection.