FTC settles privacy complaint against online ad network

ScanScout's description of how consumers could opt out of data collection didn't work, the agency says

Online video advertising network ScanScout has agreed to settle U.S. Federal Trade Commission charges that it wrongly claimed that consumers could opt out of receiving targeted ads by changing their computer's browser settings to block cookies.

ScanScout used Flash cookies that browser settings could not block, the FTC said in a complaint released Tuesday. A proposed settlement from the FTC bars the company from misrepresenting its data-collection practices and its customers' ability to control collection of their data.

Two email messages to ScanScout Tuesday bounced back, and a third was not returned. No one at ScanScout's New York office picked up a phone call late Tuesday, and the call did not go to voicemail.

ScanScout is an advertising network that places video ads on websites for advertisers. ScanScout engages in behavioral advertising by collecting information about consumers' online activities and then serving video ads targeted to their interests, the FTC said in a press release.

From about April 2007 to December 2010, ScanScout's website privacy policy discussed how it used cookies to track users' behavior, the FTC said. "You can opt out of receiving a cookie by changing your browser settings to prevent the receipt of cookies," the policy said.

However, changing browser settings did not remove or block the Flash cookies, the FTC said.

The proposed settlement would bar ScanScout from misrepresenting the extent to which consumers' data is collected, used, shared, or disclosed. Within 30 days after the settlement order becomes effective, ScanScout must place a prominent notice on its home page saying, "We collect information about your activities on certain websites to send you targeted ads. To opt out of our targeted advertisements, click here."

The hyperlink must take consumers to a mechanism that allows them to prevent the company from collecting information that can identify them or their computer, or redirecting their browser to third parties that collect data without their approval.

The proposed order would also require that the company must disclose that it collects consumer data to send targeted ads and disclose the current status of the consumer's tracking choices.

The FTC will publish a description of the consent agreement package in the Federal Register shortly. The agreement will be subject to public comment through Dec. 8, after which the commission will decide whether to make it final.

Grant Gross covers technology and telecom policy in the U.S. government for The IDG News Service. Follow Grant on Twitter at GrantGross. Grant's e-mail address is grant_gross@idg.com.

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Tags advertisingU.S. Federal Trade CommissionScanScoutregulationCivil lawsuitslegalgovernmentinternet

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