OFT investigates misleading online advertisers

Those buying goods online may be giving up more privacy than they realise

An Office of Fair Trading (OFT) investigation into online behavioural advertising and targeted offers has concluded that self-regulation does not go far enough to protect consumers.

The consumer rights group's latest market study (PDF) said that more needs to be done to inform people about the information being collected when they shop online and click on ads for web sites and offers.

"The OFT is keen to engage with industry players and consumer groups while behavioural advertising is in its relative infancy, and before targeted pricing takes hold, so that the market develops in a way that protects consumers from bad practice," said Heather Clayton, senior director in the OFT Consumer Market Group.

"Discussions now about the potential for benefits and harm, and how consumer protection legislation applies, will stand us in good stead in the event that industry action proves ineffective or targeted pricing becomes a reality."

The OFT estimates that the revenue potential for such ads is between £64m and £95m, and is only likely to grow in the coming years.

With social networking, and the requirement to share personal information high on the agenda, the OFT said that there are "objections to the practice which centre around privacy issues and the possibility for the misuse of personal data".

Also of concern is the harvesting of information about previous purchases, which could deter shoppers, especially if they knew the extent of the content.

The OFT will work with the Internet Advertising Bureau with the aim of promoting the use of opt-out choices alongside behavioural adverts.

However, the consumer group added that it will turn to the law if such actions prove ineffective, and seek enforcement actions with the help of the Information Commissioner's Office.

Seamus Reilly, director of Ernst & Young's IT risk and assurance team, argued that
organisations which aren't transparent about what data they're collecting will find themselves under scrutiny from the ICO.

"There is a balance which must be struck between the organisation's needs and the individual's needs with regards to the collection of such data and how it will be used," he added.

"Transparency is key, individuals should be aware that such information is collected and how it will be used. They should be provided with appropriate opt in/opt out facilities which allows them to decide if they want to participate in this data collection process."