Report: The National Advertising Initiative - Failing at Consumer Protection and at Self-Regulation

The National Advertising Initiative: Difficulties with the NAI

Roadmap: The National Advertising Initiative – Failing at Consumer Protection and at Self-Regulation: Difficulties with the NAI When people sit at their computers and browse for new car information or to learn about the latest treatment for diabetes, when people walk down the street reading stock quotes on their mobile phones, and when people text a response for more information based on a television commercial they saw, their actions speak louder than words. A new realm of consumer tracking has grown up to translate these activities into advertisements. This kind of advertising is behaviorally targeted advertising. Behaviorally targeted advertising is as controversial as it is lucrative.

The National Advertising Initiative: The Beginnings of the NAI

In 1999, when online advertising was still a fresh segment of the advertising sector, widespread concerns arose about the ways that consumers could be tracked and targeted online for advertising purposes. The Federal Trade Commission held a workshop on online profiling in November 1999. [6] The concerns of the day were distilled in a FTC report to Congress in June 2000, Online Profiling: A Report to Congress. In that report, the FTC found that online profiling presented privacy problems for consumers. The FTC found that online profiling was primarily accomplished through banner ads, cookies, and web bugs, also called web beacons. [7] The Commission also concluded that online profiling was largely invisible to consumers:

The National Advertising Initiative: The NAI is Broken and Does Not Protect Consumers

Although it is possible to identify many aspects of the NAI that are broken, this report focuses on four areas in particular: 1) the effectiveness of the NAI opt-out cookie as the primary tool for stopping tracking; 2) the applicability of the NAI to types of tracking that extend beyond the traditional cookie and to business models not expressly covered by the NAI; 3) the constantly shifting membership of the NAI; and 4) auditing and enforcement of the NAI.

The National Advertising Initiative: Beyond Cookies - Tracking Technologies are not Always Exposed or Visible to Consumers

A traditional cookie as defined by the NAI is not the only persistent identifier and tracker available to network advertisers and marketers anymore. New technologies and techniques have become routine business practice since the original NAI was written, particularly in the area of persistent identifiers and tracking technologies. A rich array of browser cache cookies, Flash cookies, and other non-NAI-covered tracking techniques not only exist, but are in use today.

The National Advertising Initiative: Notice - Still Not Clear or Conspicuous

One of the issues raised in the FTC reports to Congress about online behavioral profiling was notice. The FTC and the NAI promised “robust” enforcement of notice. Unfortunately, because the foundational understandings of the NAI are out of date, the NAI ideas of notice that flow from those understandings are also out of date.

The National Advertising Initiative: TRUSTe’s Systematic March From NAI Transparency

TRUSTe began reporting on NAI complaints in March 2002. It used its Watchdog Reports to do this. In the intervening years, TRUSTe public reports regarding the NAI reveal a troubling, systematic reduction of transparency regarding the NAI. (See Appendix B for a complete listing of all TRUSTe NAI complaints.)

The National Advertising Initiative: Oversight of NAI is a Failure

Oversight of the NAI has been neglected. As a result, there are many things the public simply does not know about the program, in particular, its effectiveness. To date, the public does not know how many consumers participate in the program. The public does not have numbers comparing consumers who have visited opt-out pages with consumers who have successfully opted out. How many consumers actually have opt-out cookies, and for how long? Where are the reports on whether or not it is effective for those who do opt-out? Are NAI members actually complying with the obligations?

The National Advertising Initiative: Conclusion

The NAI has failed. The agreement is foundationally flawed in its approach to what online means and in its choice of the opt-out cookie as a core feature. The NAI opt-out does not work consistently and fails to work at all far too often. Further, the opt-out is counter-intuitive, difficult to accomplish, easily deleted by consumers, and easily circumvented. The NAI opt-out was never a great idea, and time has shown both that consumers have not embraced it and that companies can easily evade its purpose.

The National Advertising Initiative: Appendix B - Listing of TRUSTe Complaints Regarding NAI From 2000 – 2007

Roadmap: The National Advertising Initiative – Failing at Consumer Protection and at Self-Regulation: Appendix B - Listing of TRUSTe Complaints Regarding NAI From 2000 – 2007 Note: The World Privacy Forum relied on the TRUSTe WatchDog reports to compile this table. For the reports, see: <http://www.truste.org/consumers/watchdog_reports.php>.