Yahoo! Prices Member Privacy at $60, Army Advancing Armor Research

West Palm Beach, FL (AHN) - For some, it is a comfort to know that Yahoo will work with law enforcement if necessary to catch criminals, rifling through their private messages to get the job done. However, the cost for such an invasion -- $60.

For $20, Yahoo will turn over to authorities basic user ID information. Between $30 and $40, they will give contents of subscriber accounts, including e-mail. And for $60, authorities can obtain access to all the contents to an account, including logs of Yahoo Groups.

But Yahoo is not the only company cooperating with authorities in this manner. In 2008, government officials made 8 million requests for to Sprint to turn over GPS information.

Matthew Sullivan, Sprint Nextel, in a letter to All Headline News explains that figure:

"The '8 million' figure does not represent the number of customers whose location information was provided to law enforcement, nor does it represent the instances or cases in which law enforcement contacted Sprint seeking customer location information.

Instead, the figure represents the number of individual automated requests, or "pings", for specific location information, made to the Sprint network as part of a series of law enforcement investigations and public safety assistance requests during the past year.

The critical point is that a single case or investigation may generate thousands of individual requests to the network as the law enforcement or public safety agency attempts to track or locate an individual over the course of days or weeks.

As a result, the 8 million automated requests or pings were generated by thousands (not millions) of instances in which law enforcement or public safety agencies sought customer location information.

Several thousand instances over the course of a year should not be shocking given that Sprint has more than 47 million customers and requests from law enforcement and public safety agencies are due to a variety of circumstances: exigent or emergency situations (missing person cases), criminal investigations, or cases where a Sprint customer consents to sharing location information (car is stolen and owner realizes his phone is in the car so he allows law enforcement to track his phone).

In all cases Sprint requires a valid legal request appropriate for the circumstances, meaning the request must be accompanied by either a subpoena, court order or customer consent. In all cases, Sprint complies with applicable state and federal laws."

One-Third May Be Open To Behavioral Tracking

Nearly a third (32%) of Americans say they would be open to having their Web-surfing and television viewing habits monitored in order to receive ads more relevant to their interests -- as long as the data collected could not identify them as individuals, according to a global study of consumer media habits and advertising attitudes conducted by market research firm Synovate.

Another 8% said they would be open to such monitoring with "few, if any, concerns."

However, 35% said they would reject such technology because they would be concerned about monitoring services collecting data about them, and 9% said that they are not interested in changing the ads to which they are exposed.

On a worldwide basis, 11% expressed acceptance with few or no concerns, 26% indicated openness if individual identities were protected, 27% indicated rejection on the basis of privacy concerns, and 16% said they are not interested in changing the ads to which they are exposed.

The survey was conducted in September among consumers in the U.S. and 10 other countries. The U.S. survey took place online, and the 500 respondents comprised a representative national sample, according to Synovate.

The results confirm that consumers are taking steps to avoid advertising, and that this behavior varies by medium. For instance, 41% report that they are avoiding Web sites with intrusive ads or pop-ups more frequently than they did a year ago (9% are doing this less frequently, and 37% have not changed the frequency of this behavior). Even more (44%) are more frequently skipping ads when watching TV or listening to radio (5% are doing this less frequently, and 46% have not changed this behavior).

Here's a summary of U.S. consumer responses when asked about their frequency of engaging with brands/advertising via the Internet and social media during the past year:

• Following a brand on Twitter: 82% have never done this, 4% are doing it more often than a year ago, 1% less often, and 9% with the same frequency.
• Promoting a brand or ad on their social networking pages or becoming a brand fan: 63% have never done, 9% are doing more often, 6% less often, and 18% with the same frequency.
• Sharing links to ads that they like with friends: 55% have never done, 7% are doing more often, 9% less often, and 26% with the same frequency.
• Searching for an ad on the Internet (e.g. YouTube): 51% have never done, 8% are doing more often, 12% less often, and 27% with the same frequency.

Consumers were also asked to indicate how important various media are to them. Not surprisingly, Americans love their TV: 41% said they'd miss it a great deal if it wasn't there, and 34% said they "can't live without it." Only 19% said they like it but don't need it, and 5% that they could easily live without it.

But according to this survey -- remembering that it was conducted online -- Americans are even more attached to the Internet: 58% said they can't live without it, and 31% said they'd miss it a great deal if it wasn't there. Just 10% said they like it but don't need it, and 1% that they could easily live without it.

More than one-third (35%) said they can't live without their mobile phones, and another 28% would greatly miss them.

In comparison, 25% of Americans said they would greatly miss newspapers, and 10% that they can't live without them, while 23% and 6%, respectively, expressed those opinions about magazines.

Looking at perceptions about the amount of advertising in various media, 71% of Americans said there are too many ads on TV -- although 26% actually said that the number is about right, and 1% would be "happier to see or hear more ads."

Print media came out more favorably. Just 30% and 54% said that there are too many ads in newspapers and magazines, respectively, while 61% and 40% said that the number of ads is just right in newspapers and magazines, respectively. Four percent would like to see more ads in newspapers, and 2% would like to see more in magazines.

As for the new advertising frontier of mobile phones, 39% feel that the current number of ads is about right, versus 28% who already view advertising as too intrusive. Nearly a third (31%) were undecided.

How many would be willing to be exposed to more ads if they were paid for it? For both TV and the Internet, more than half (52%) said they would agree to be exposed to more ads, while 40% would not be willing. Slightly more - 54% -- would be willing to view more ads on their cell phones if they were paid to do so, although 31% said they would not be willing.

Looking at ad content, novelty appears to be more important than perkiness to U.S. consumers. Asked what characteristics their favorite ads tend to have in common, 21% chose "innovative/unique," 17% chose "spontaneous/playful," 15% chose "logical/straightforward," and 12% "optimistic/happy."

IAB: 'Advertising Is Creepy'

Faced with increasing pressure from Washington, the Interactive Advertising Bureau launched a public service campaign on Thursday aimed at educating consumers about behavioral targeting.

The online campaign, created pro bono by WPP's Schematic, features rich media banner ads with copy like "Advertising is creepy" and "Hey, this banner can tell where you live. Mind if we come over and sell you stuff?"

More than one dozen publishers -- including Microsoft, Google's YouTube, and AOL -- have committed to donate a combined 500 million impressions for the initiative.

The campaign comes as policymakers are questioning whether data collection by marketers violates consumers' privacy. Rep. Rick Boucher (D-Va.) has said he plans to introduce a bill that could require Web companies to notify users about online ad targeting, and in some circumstances, obtain their explicit consent.

In addition, the Federal Trade Commission has criticized the industry for using dense privacy policies to inform people about behavioral targeting, or tracking people online and sending them ads based on sites visited.

In a meeting with reporters Thursday morning, IAB President and CEO Randall Rothenberg said one goal of the campaign is to address regulators' concerns that consumers don't understand behavioral advertising.

The ad units themselves offer information about online ad techniques. For instance, users who mouse over the "creepy" banner can pull down copy stating that companies don't use "personally identifiable information" to determine which ads to serve.

Users who click through land on the IAB's Privacy Matters page, which includes a description of various forms of online advertising, information about cookies (including Flash cookies) and links to opt-out pages.

The portion of the landing page devoted to cookies says they "contain data that allow a Web site to customize content and advertising to your interests but generally do not contain personally identifiable information." A section with information about geotargeting states that an IP address "reveals nothing personal about you to marketers and websites."

But privacy advocate Jeff Chester immediately raised questions about such statements. "They are ignoring the growing consensus that cookies and IP addresses are personally identifiable," says Chester, executive director of the Center for Digital Democracy.

Cathy Dwyer, a privacy expert and professor of information systems at Pace University, also questions whether the banners' headlines are too sophisticated to draw in users. "Even 'creepy' itself is a technical term," she says, adding that it's mainly industry insiders and observers who use that word in discussions about behavioral advertising.

The FTC said this year in its report about online behavioral targeting that non-personally identifiable information could be used to identify specific users.

In the past, industry groups and observers defined personally identifiable information as names, addresses, phone numbers or other information that could be used to contact an individual directly.

Critics recently moved away from that definition, in part because Web users have been identified based on supposedly anonymous data. The most famous example occurred in 2006, when AOL publicly released search logs showing users' queries and "anonymized" IP addresses for more than 600,000 users, Within days, one "anonymized" user, Thelma Arnold, was profiled in The New York Times after reporters identified her based on her search queries.

Schematic CEO Trevor Kaufman told reporters Thursday that a test of the campaign in late October and early November yielded a click-through rate of 0.5%. The trial involved 7 million impressions, mainly served on Microsoft's Hotmail.

Separately, the digital rights group Center for Democracy & Technology also launched a privacy campaign on Thursday -- although with a different goal. The CDT is hoping to persuade users to lobby Congress for online privacy legislation. The Web site for the CDT's "Take Back Your Privacy" campaign enables users to submit concerns directly to the FTC and to send emails to their lawmakers.

Newspaper Group Argues Against Opt-In Consent For Behavioral Targeting

The Newspaper Association of America is touting online behavioral targeting as a partial fix for the industry's revenue woes.

"Targeted advertising shows significant promise for newspapers seeking new ways to support local journalism," the organization writes in comments filed with the Federal Trade Commission. The comments were filed in advance of this week's FTC public workshops about media, "From Town Crier to Bloggers: How Will Journalism Survive the Internet Age."

Sophia Cope, legislative counsel at the NAA, adds that members of Yahoo's newspaper consortium have benefited from the company's online ad-targeting capabilities. "Based on preliminary results, it looks like targeted advertising will be one of the solutions that helps newspapers get back some of their revenue," she says. The NAA says that Yahoo's newspaper consortium has generated at least $50 million since last year. The initiative involves Yahoo powering behavioral targeting for some newspapers' Web sites, among other features.

"The newspaper industry wants the flexibility to figure out what's going to work," Cope says. "The industry needs time to figure out what solutions will rise to the top and be successful."

The NAA estimates that by the end of December, newspapers' ad revenue will have plummeted almost 40% in two years.

The trade group argues in its comments that a regulatory framework requiring companies to obtain users' affirmative consent to online tracking for ad-targeting purposes would be impractical. "While newspapers support robust consumer notice and choice, newspapers worry that a government mandated 'opt in' choice mechanism for 'third party' targeted advertising may not be workable in practice," the organization writes. The NAA adds that requiring online readers to opt in during their initial visits would "degrade the user experience and make it difficult to communicate the benefits of targeted or interest-based advertising."

Privacy advocate Jeffrey Chester, executive director of the Center for Digital Democracy, says he disagrees with the NAA's stance. "It would be more effective for newspapers' branding to be known as the place where privacy is respected," he says. "Just because everybody is engaged in this data collection melee doesn't mean everyone has to do it."

Chester, who is also slated to speak at the FTC's workshops this week, adds that many people visit news sites without realizing the extent to which they collect data. "Few readers know that readers know that newspapers are stealthily watching every story they read, tracking them story to story," he says. "No one knows that news sites have become a data collection den."

Current industry self-regulatory guidelines and FTC recommendations call for companies to notify consumers about online ad targeting and allow them to opt out. Chester and other privacy advocates have recommended moving to a system where Web sites and ad companies can collect and retain non-sensitive information about computer users for up to 24 hours, unless people opt out. After that initial period, the companies would need consumers' opt-in consent to retain the data.

Marking an apparent shift from its position last year, the newspaper organization praised the FTC's recent endorsement of a voluntary notice and opt-out regime. But in 2008, the NAA warned that even voluntary guidelines could have an impact on newspapers' First Amendment rights.

Other people scheduled to speak at the workshops include News Corp. chief Rupert Murdoch, Magazine Publishers of America CEO Nina Link, Ball State University's Mike Bloxham, the Online Publishers Association President Pam Horan, and Interactive Advertising Bureau Research Director Joe Laszlo.

3 Ways to Guard Against Click Fraud

By Heather Fletcher


No one likes to be cheated. And click fraud touches a raw nerve for many marketers. So New York-based online advertising network Undertone Networks identified some best practices for agencies and advertisers to ensure the safety of online ads and the brands they represent.
Click Forensics reported in October that the average click fraud rate for the third quarter of 2009 was 14.1 percent, up from 12.7 percent during the previous quarter. "As advertisers, publishers and ad networks are getting smarter, so are the attackers," according to Undertone. "A recently uncovered click fraud ring run out of China involved 200,000 IP addresses and more than $3 million worth of fraudulent clicks."

Undertone provides the following advice:
1. Engage the ad server as the first line of defense: Most ad servers allow advertisers to pull reports on the country of origin for impressions and clicks. Do your homework on your ad-serving platform to understand how it counts and handles click fraud, and closely monitor site visitors, time spent and activity related to each click. These related measurements help you identify not only fraudulent activity, but which clicks are truly valuable.
2. Don't pay for irrelevant international impressions: Up to 40 percent of publisher site traffic comes from outside the United States, and ad networks are used as a clearinghouse for this inventory. Too often, unsuspecting advertisers serve domestic creative to international audiences who can't act. Unless international users are your target, specify U.S. traffic only in your insertion orders. A growing percentage of click fraud is through foreign IP addresses, so monitoring this traffic will reduce your exposure.
3. Modify terms and conditions on media contracts: By far, the most proactive measure advertisers can take to prevent fraud is to modify the contracts they use with media partners. These amendments include specifically excluding incentivized traffic, use of ad exchange inventory, as well as practices like ad stacking (when a click on one ad actually generates clicks on other associated ads) and daisy-chaining (when the original ad host recycles ads to other sites in order to boost revenue), which makes companies more vulnerable for click fraud.

Google Trademark Policy Worries Holiday Advertisers

By Kevin Newcomb , November 13, 2009


Heading into the holiday shopping season, search marketers are worried that Google's new trademark policy for AdWords will drive up costs for big brands.

"The holiday season will be a real proving ground, to see how quickly Google responds to issues," Jeremy Hull, account leader at Range Online Media, told ClickZ. "Do they have an adequate team in place, with policies and procedures that are scalable for the holidays?"

While the number of infringing ads a brand owner has to deal with will vary, the issue is amplified during the holiday shopping season, Hull said. "The fraudulent advertisers know that the legitimate marketers are swamped with holidays, and use the busy time to push out more trademark-infringing ads," he said.

The impact of other advertisers bidding on a trademark most often comes in the form of increased costs to the trademark owner, who has more competition on his trademarked terms, which drives up bid prices. There's also the issue of missed revenue, where a searcher will buy from another site advertising on a trademarked keyword, and not from the trademark owner's site, Hull said.

In May 2009, Google changed its policy toward trademark usage in AdWords ads. Previously, Google had not allowed advertisers to use trademarks they didn't own, either for targeting or in ad text, and Google was responsible for policing that policy.

Under the new trademark policy, advertisers can use trademarks they don't own under certain circumstances, such as if they are reselling a product or discussing the product on an informational site.

Advertisers that are using trademarked terms includes affiliates of a brand, who may or may not have permission from the trademark owner, and sellers of gray-market and black-market goods, who usually don't have permission.

"Anything you could buy as a knock-off on the streets of New York and rub the logo off with your fingernail...those are the same brands you are seeing victimized by fraudulent behavior online as well," Hull said. "So, major apparel, luxury, jewelry, fragrance, and other well-known and sought after brands are the hardest-hit by trademark infringement."

While gray- and black-market goods are an issue for some categories, the bigger issue for many retailers is inadequate trademark policies built into their own affiliate programs, according to Hull.

The increased competition has caused several Range clients, especially those with luxury retail brands, to see a dramatic decrease in clicks on their ads since the policy change, despite similar impression volume, Hull said.

Others have also seen an increase in cost-per-click (CPC) rates they pay for ads, according to Alison Childers, senior account manager at Range Online Media. On some brand terms, CPC rates have risen by as much as 50 percent, while clickthrough traffic has dropped by 30 percent, she said.

"Those numbers are holding true across all big brand terms," Hull said. "It's a free-for-all on brands."

What Brands Fear

Even when that's not happening, there is potential damage to the brand in the form of mixed messages to consumers, such as an affiliate using a low-cost message to sell a luxury brand, Hull said. Big brand owners go to great lengths to control the messages around their brands and align their efforts, but without trademark protection in AdWords, "they've lost control of the space," he said.

Additionally, the onus is on trademark owners find ads using their trademark without permission, and then bring them to Google's attention via an online form.

"We believe that this approach gives users more choices and access to as much information as is relevant to their search or interest," a Google spokesperson told ClickZ. "Some trademark owners support other advertisers using their trademarked terms in ad text to generate traffic and sales of their products; other trademark owners feel differently."

Google's Policy

Google will investigate allegations of trademark infringement "as a courtesy," when trademark owners file a complaint with them. If Google's investigation finds that an advertiser is using a trademark owner's term in the ad text in a manner which is competitive, critical, or negative, it will disapprove the ad for violation of Google's policies, notify the offending advertiser, and prevent the advertiser from using the trademark in similar ad text in the future. Repeat offenders of this policy are subject to account suspension, according to Google's spokesperson.

It was pragmatic, from a business perspective, for Google to change its policy, according to Patrick Garrett, managing director of Outrider, part of GroupM Search.

"They've handed off all the legwork required to track down violators to the advertisers. They've also opened up new spending opportunities by allowing more people to buy ads on keywords that they couldn't buy on before," Garrett said.

Google basically brought its policy in line with that of other search engines. But, since Google has such tremendous volume compared to other search engines, the changes Google made in May had a big impact on advertisers, Garrett said.

"There's been an onslaught of people playing in the trademark space [since Google changed its policy]. Some are people that have the right to use your trademark, others don't." Garrett said. "We're OK with taking on the burden of monitoring our clients' trademarks, but we'd like more clarity from Google on how they're going to help us combat issues when they come up."

For instance, Garrett would like Google to make it clear what criteria Google uses when deciding whether to take down a single ad or ban an advertiser completely. It's currently too easy for an advertiser to simply create a new ad that still uses the trademark after the first one is banned, he said. Also, he said it's not clear what evidence Google wants from trademark owners to help expedite the process.

Hull agreed that clarity into Google's trademark policy is uncharacteristically lacking. "Everything else with Google is so cut-and-dried; you know the process. This seems so nebulous," he said.

Privacy Advocates Want To Bust Blockbuster Over Beacon

Privacy advocates are asking a federal appellate court to uphold a ruling allowing consumers to sue Blockbuster for participating in Facebook's Beacon program.

In papers filed recently with the 5th U.S. Circuit of Appeals, the Electronic Privacy Information Center is urging the court to reject Blockbuster's argument that consumers have no right to bring a class-action lawsuit because the company's terms of service require mandatory arbitration.

"To permit companies to substitute unilaterally mandatory arbitration clauses for the express language set out in federal statute will undermine privacy safeguards, contribute to further privacy harms, and frustrate the intent of Congress," the privacy group argues.

The case grows out of Facebook's all-but-defunct Beacon program, which told users about their friends' activity at outside sites including Blockbuster, Zappos and Overstock. The program originally operated by default, spreading news about members' purchases unless they affirmatively opted out. Some users immediately complained that they were blindsided by the platform, which transmitted information that they had intended to keep private. Members also said they didn't see the opt-out boxes -- some of which were served via pop-ups that disappeared after just 20 seconds.

Within weeks of its launch, Facebook revised the program to make it opt-in. Shortly afterwards, the company allowed people to permanently opt out.

In April of 2008, consumers in Texas filed a potential class-action lawsuit against Blockbuster for participating in Beacon. The consumers alleged that the movie rental company had violated the Video Privacy Protection Act, a 1988 federal law passed after a newspaper obtained video rental records of U.S. Supreme Court nominee Robert Bork. That law provides for damages of $2,500 per violation.

Blockbuster said the dispute did not belong in court because its user contract called for arbitration and banned class-action lawsuits, but U.S. District Court Judge Barbara Lynn in Dallas rejected that argument. She ruled in April that Blockbuster's contract with users was "illusory" because the agreement said that movie rental store could change the terms and conditions at any time.

Blockbuster appealed to the 5th Circuit, which is now considering the case.

John Verdi, a lawyer with the Electronic Privacy Information Center, says that a decision in Blockbuster's favor would effectively allow companies to avoid federal privacy law.

"There's a real risk that the court could put consumers in a situation where, as a practical matter, they wouldn't have the rights that Congress intended them to have," he says.

Regardless of the appellate court's decision in this appeal, the consumers' lawsuit against Blockbuster could still be dismissed if a class-action settlement of a separate lawsuit in California against Facebook and its partners goes through.

In the California case, U.S. Magistrate Judge Richard Seeborg in San Jose tentatively approved a deal that calls for Facebook to shutter Beacon permanently and to pay $9.5 million -- approximately two-thirds of which will fund a new privacy foundation. If that settlement is approved in its current form, it would extinguish the Texas litigation against Blockbuster. But the consumers in Texas are likely to object to that settlement, and the ultimate outcome remains uncertain.

Davids Cookies

FTC Urged To Clamp Down On Data Collection Online

Privacy advocates are renewing calls for the Federal Trade Commission to impose limits on online data collection and ad targeting.

"It should be evident to all that self-regulation to protect consumer privacy online has been a dismal failure," the Center for Digital Democracy and U.S. Public Interest Research Group wrote in comments submitted to the Federal Trade Commission in advance of its privacy roundtable next month. "We need strong baseline laws and regulations to ensure serious industry compliance."

The Interactive Advertising Bureau, which opposes new behavioral targeting regulations, doesn't plan to submit comments before the first roundtable, says Mike Zaneis, vice president for public policy.

"We're going to wait and see how this first day of roundtables goes, and see if it merits comments," Zaneis says. The FTC has scheduled the first of three day-long privacy discussions for Dec. 7.

The privacy advocates argue that Web companies are not providing consumers with enough power over the collection and use of their data. "Consumers are faced with a largely invisible and all-encompassing data collection apparatus, often operating automatically, that makes decisions about the prices and services they are offered," the groups write. They add that Web users "need to know, and should have the right to approve, the marketing segments into which they have been placed."

The advocacy groups also say the industry's new self-regulatory principles -- unveiled in July by the American Association of Advertising Agencies, Association of National Advertisers, Council of Better Business Bureaus, Direct Marketing Association, and the Interactive Advertising Bureau -- do not adequately protect consumers.

Among other criticisms, the privacy groups allege that the ad associations' new guidelines don't sufficiently guard sensitive data. The principles require companies to obtain consumers' consent to collect such data, but define it as financial account numbers, social security numbers, pharmaceutical prescriptions, or medical records about a specific individual. The privacy groups argue that the industry's definition of "sensitive" is far too narrow.

The digital rights organization Center for Democracy & Technology also filed comments that were critical of current online behavioral-targeting policies. The CDT called on the FTC to endorse broad fair information collection practices.

The FTC's current self-regulatory guidelines emphasize that companies should notify users about online tracking and targeting and allow them to opt out. But the CDT says that notice-and-consent regime doesn't go far enough because it only allows consumers to make a choice at the time of collection. "Long after data is collected, it lives in a Wild West of shared and sold personal profiles and databases that give consumers no control over how their identities will be tracked and used," the group wrote.

The CDT also expressed skepticism about whether industry self-regulation can protect consumers. "A self-regulatory system that relies on trade associations to provide implementation and accountability guidelines is clearly incomplete: the activities of non-members will remain unregulated," the organization argued.

Three years ago, the Center for Digital Democracy and U.S. Public Interest Group filed a petition with the FTC that kicked off the current debate about whether behavioral targeting compromises users' privacy. In January, they filed papers with the FTC alleging that mobile companies were using "unfair and deceptive" behavioral targeting strategies.

Google The Cookie Monster

Net Neutrality Proponents Warn FCC Of Loopholes In Regulations

Leading net neutrality proponents are warning that the Federal Communications Commission's proposed net neutrality rules could create significant loopholes for Internet service providers.

The new regulations codify the four principles set out in a 2005 Internet policy statement, which provide that Web users are entitled to access all lawful content, applications and services, and that they can attach devices to the network. The FCC also proposed codifying two additional principles -- nondiscrimination and transparency.

But there are two major ambiguities in the proposed rules, according to advocates. One is that the FCC hasn't clarified what type of activity it will consider discriminatory. The other is that the FCC carves out an exception to all rules for reasonable network management practices, yet doesn't precisely define such practices.

Five law professors sent the FCC a letter on Monday stating that those ambiguities "appear likely to provide particularly generous opportunities to try to work around the Commission's efforts." The letter was signed by Yale's Jack Balkin, South Texas College's John Blevins, University of Louisville's Jim Chen, Harvard's Larry Lessig, Stanford's Barbara van Schewick and Columbia's Tim Wu.

"We think it is surprising that the FCC would not want to provide some guidance on the applicable standard for reasonable network management, lest, as a law professor would say, the exception swallow the rule," the academics wrote.

Broadband advocacy group Free Press raised similar concerns in policy brief filed Tuesday. "Since all six principles contained in the proposed open Internet rule are subject to 'reasonable network management,' a broadly permissive exemption standard would threaten to swallow the rules," the group wrote.

The advocates also asked the FCC to clarify the type of conduct it considers "discriminatory." The notice of proposed rulemaking says that nondiscriminatory means "that a broadband Internet access service provider may not charge a content, application, or service provider for enhanced or prioritized access."

But Free Press and the law professors argue that charging for enhanced access is only one illustration of discriminatory behavior and are asking the FCC to state that other forms of discrimination would be illegal.

Marvin Ammori, a University of Nebraska law school professor who advises Free Press, tells Online Media Daily that it's important for the FCC to define its terms so the public can weigh in on the proposals.

"Ambiguities around key terms like reasonable network management make it difficult to know how strong the rules will actually be," he says.

IAB Lobbies Against Proposal To Expand FTC's Power

The online ad industry is sounding the alarm about a new bill currently pending in Congress that would expand the Federal Trade Commission's power by making it easier for the agency to create rules and to bring civil lawsuits.

"There are reasons why there have been limits on the FTC, and we want to see those limits preserved," says Mike Zaneis, vice president for public policy at the Interactive Ad Bureau. "This is legislative priority No. 1 for our industry."

The Consumer Financial Protection Agency Act (H.R. 3126) cleared the House Energy and Commerce committee last week and now moves to the full House, where it's expected to pass. But the proposal's fate in the Senate is uncertain.

The current House version creates a new consumer protection commission while also beefing up the FTC's power in a few key ways. The bill removes administrative hurdles to the FTC's rulemaking ability, makes it easier for the agency to pursue civil litigation, and allows the FTC to target ad companies that aid and abet unfair practices.

These new powers are so significant that industry observers are already saying the bill would effectively make FTC Chair Jon Leibowitz an "Internet czar."

For his part, Leibowitz said in a statement to the energy and commerce committee that the "modest new authority" given to the commission "will help ensure that we have the tools necessary to fight fraud and go after those who perpetrate it."

Industry executives say that the existing curbs on rulemaking ability have contributed to the FTC's decision to support industry self-regulation of matters like online behavioral targeting and privacy.

"We'd hate to see them move directly to government regulation in all of these areas, but that's the prospect that we're facing if this is enacted," Zaneis says.

Currently, the FTC can only make rules aimed at curbing a prevalent practice. But the bill would remove that restriction, allowing the agency to enact regulations as long as there's a rational reason to believe the rule would stem from unfair and deceptive conduct. The bill also would provide for a faster rulemaking procedure.

A host of consumer groups and privacy advocates, including the American Academy of Child and Adolescent Psychiatry, Consumers Union, Center for Digital Democracy and the Electronic Frontier Foundation, are advocating in favor of the bill. They argue that the current restrictions on the FTC hinder its effectiveness.

"We believe that the FTC must play a more proactive role addressing critical consumer concerns, including privacy, online marketing, and food advertising to young people," the groups wrote last week to the leaders of the House Energy and Commerce Committee.

The bill also would enable the FTC to pursue civil actions without prior review by the Department of Justice. In addition, the measure would let the FTC impose civil penalties without prior rules or orders.

A provision that would allow the FTC to prosecute companies that aid or abet an unfair act could be especially damaging to marketers and intermediaries, says the Association of National Advertisers. "This would have serious implications for advertising agencies, media companies and other companies that play any role in the communication/sale/delivery process," ANA Executive Vice President Dan Jaffe said last week in a letter to lawmakers.

Observers say the full House will probably pass the bill by the end of the calendar year. The proposal is expected to move more slowly in the Senate, where lawmakers are still hammering out a draft of the bill.

IAB Calls For Reversal Of ‘Unfair and Unconstitutional’ FTC Blogger Regs

The Interactive Advertising Bureau is calling on the Federal Trade Commission to withdraw its recently revised guidelines governing dealings between bloggers and marketers. The ad trade group says the rules “unfairly and unconstitutionally” impose penalties on online media for practices, while exempting traditional media. Furthermore, in an open letter to FTC Chairman Jon Leibowitz, Randall Rothenberg, the IAB’s president and CEO, says the FTC’s distinction between offline media and online media, “constitutionally dubious” by invoking the First Amendment right to free speech. Release

Apart from the separate treatment of social media and traditional news organs, the IAB’s dispute zeros in on the FTC’s warning of an $11,000 penalty against bloggers for failing to disclose free promotional products from marketers they discuss online. The FTC very quickly sought to downplay the worries about the fine, after a firestorm grew following the release of the new guidelines, which were last updated in 1980.

As our Staci D. Kramer reported last week, Richard Cleland, assistant director, division of advertising practices at the FTC, said the “$11,000 fine is not true. Worst-case scenario, someone receives a warning, refuses to comply, followed by a serious product defect; we would institute a proceeding with a cease-and-desist order and mandate compliance with the law. ... There’s no monetary penalty, in terms of the first violation, even in the worst case.” Instead, he said the FTC’s guidelines are intended to serve as education.

But there are still some doubts out there about whether the FTC means that. The IAB wants to make sure that no fines will be handed down and therefore wants the FTC to put it in writing.
“They—and we—are not arguing that bloggers and social media be treated differently than incumbent media,” says Rothenberg’s letter. “After all, most newspapers, magazines, radio stations and television networks, in recognition that Americans are embracing new forms of social communications, have established their own blogs, boards, Facebook pages, Twitter feeds, and the like. Rather, we’re saying the new conversational media should be accorded the same rights and freedoms as other communications channels.”

Yahoo Settles Lawsuit - lawyers win, advertisers lose.

Yahoo Inc. has reportedly settled a class action lawsuit with some of its search advertising customers who weren't happy about where their ads were showing up.

Lawsuit administrator Rust Consulting sent an e-mail to members of the group that preliminary court approval of the settlement has been granted and posted copies of court documents here.

Yahoo customers who sued claimed that when ads they placed through "Sponsored Search" and "Contact Match," they showed up in spyware, domain name parking sites, typosquatting sites and other undesirable locations on the Web.

They sued the Sunnyvale company (NASDAQ:YHOO) for breach of contract, unjust enrichment, misrepresentation, civil conspiracy, and unfair business practices.

As part of the settlement, Yahoo agreed to offer a new filtering option for ads, and to modify how it handles disclosures and click fraud investigations:

It also agreed to develop and offer a way for customers to control where their Yahoo Ads appear.

Advertisers got screwed again, of the $4.3 million settlement, $4.17 million is going to the lawyers.

3M In Click Fraud Over Two Weeks? Just The Beginning

A recently disbanded click fraud ring in China racked up $US3 million worth of clicks in two weeks. $US3 million that we’re aware of. Just how detectable is this whole business of racking up fraudulent ad revenue clicks?

That intricate mess of lines above represents a portion of DormRing1, the click fraud bunch that was caught in China. The lines show the relationship of some of the IP addresses involved in the fraud and how they are connected to some fraudulent ad clicks. The whole network actually “involved 200,000 different IP addresses and racked up more than $US3 million worth of fraudulent clicks across 2,000 advertisers in a two-week period”. Impressive and scary at the same time.

The trouble is that no one really knows how much ad revenue DormRing1 collected before they were caught. Click-fraud monitoring services such as Anchor Intelligence, the ones behind this catch, are evolving to keep up with the scale on which these rings are operating. It’s still difficult to judge just how well they’re doing as they’re having to infiltrate forums and gain the trust of the perpetrators in a manner reminiscent of drug busts. But as the criminals are getting more elaborate, the investigations are too.