Internet ad self-regulation falling short: FTC

WASHINGTON (Reuters) - Internet advertisers have fallen short of promised self-regulation in respecting Internet users' privacy, a Federal Trade Commission official said on Thursday, even as one firm, Tacoda, said it decided to refrain from collecting some sensitive information.

FTC Commissioner Jon Leibowitz said Internet advertisers should tell consumers that information was being gathered, give them a choice to opt out, and protect any data collected.

"In practice, they often leave a lot to be desired," he said at a FTC conference to discuss the privacy implications of the data collected by Internet advertisers.

The audience was a Who's Who of Internet advertising firms such as Google Inc and Yahoo as well as privacy advocates.

Leibowitz said his 12-year-old daughter and her friends told him that they been exposed to ads that said things like "touch me harder" and "how long is your next kiss?"

"People should have dominion over their computers," he said. "We really mean it."

He left open the possibility of a "do not track" list, similar to the FTC's "do not call" registry which requires telemarketers to refrain from phoning anyone on the list. Such a "do not track" list was proposed this week by several consumer and privacy groups.

"I am concerned ... when my personal information is sold to third parties and when my online (research) is tracked across several Web sites," said Leibowitz, one of two Democrats on the five-member commission.

But several other speakers at the FTC conference cautioned against any government regulation.

Randall Rothenberg, president of the Interactive Advertising Bureau, warned against inadvertently stifling one of the most dynamic sectors of the U.S. economy.

"The government must be prudent," he said.

Trevor Hughes of the Network Advertising Initiative mocked what he called the "shock" that advertisers are trying to develop more targeted ads. "We also have self-regulatory programs," he said. "We have many, many layers of control and protection for consumers today."

ANOTHER FRONT IN PRIVACY RACE?

David Morgan, founder of the advertising firm Tacoda, which was recently acquired by Time Warner's AOL, said his company considered advertising to children a "third rail" -- a reference to the rail that delivers electrical power to a subway train. Touching it means electrocution.

Tacoda shied away from collecting certain sensitive data, even if the Internet user was anonymous, he said.

"The guidance that we've gotten is that cancer, HIV, medical conditions, we just stay away from," he said, adding that children's information and indications of sexual preference also went uncollected.

"We don't touch search data. You have to filter every bit of it to make sure it's not personal," he said.

AOL said on Wednesday it would use Tacoda's technology to let users opt out of online advertisements that are presented to individuals based on the Web sites they have visited.

Google, which has offered $3.1 billion to buy advertising company DoubleClick, is also looking at potential ways to protect consumer privacy.

Behaviorally targeted ads use cookies to track Web sites visited by a consumer so ads can be tailored to that activity.