Web advertisers propose self-regulation principles

WASHINGTON, July 2 (Reuters) - Online advertisers are proposing a mix of consumer education, disclosures about what information is being collected and special protections for children and sensitive information in an effort to head off tough legislation.

Four leading advertising trade associations -- the American Association of Advertising Agencies, the Association of National Advertisers, the Direct Marketing Association, or DMA, and the Interactive Advertising Bureau -- drew up the "self-regulatory principles."

Their immediate impetus was criticism that too much information is gathered about Internet users that is shared too widely and stored for too long.

The principles would require online advertisers to choose an icon or phrase that would be used by all websites to point Internet users to a site where they could learn what information was being collected and perhaps opt out.

"People will be able to say 'Don't collect any information on me for online behavioral advertising purposes,'" said Stuart Ingis, a partner at law firm Venable LLP who worked on the principles.

Information about children and sensitive information about all computer users would face a higher standard.

No information would be collected about "children they (advertisers) have actual knowledge are under the age of 13 or from sites directed to children under the age of 13 for online behavioral advertising," the groups said in the principles.

The principles require "consent for the collection of financial account numbers, Social Security numbers, pharmaceutical prescriptions or medical records about a specific individual for online behavioral advertising."

Internet service providers have a higher standard. They would be required to gain consent before any information was gathered.

Enforcement would be done by the Better Business Bureau and DMA, with non-compliant firms publicly reported, said Ingis.

"A lot of businesses won't partner with them," he said.

The principles will be put into effect by early 2010, said Ingis.

The industry would also create a website to educate consumers about how the Internet is monetized. Many have no idea that free services often come at the price of collected information about where a user goes on the Web.

Marc Rotenberg, president of the Electronic Privacy Information Center, called the principles "almost meaningless" and predicted that Congress would pass legislation hemming in information collection by advertisers.

"There's very little appetite in Washington today for self-regulation," said Rotenberg. "People have no idea about how much information is being collected about them online."

Yahoo (YHOO.O) supported the proposal because it "raises the bar on transparency," said Anne Toth, vice president of policy for Yahoo.

"What's really notable about the effort is just how many organizations are involved in this. 5,000 corporate members," she said. "What is notable about this is the scope of involvement." (Reporting by Diane Bartz; Editing by Steve Orlofsky)