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European Parliament proposes tough behavioural ad rules

Out-Law News | 11 Nov 2010 | 9:34 am | 3 min. read

Adverts based on a web user's activity should carry a sign saying 'behavioural advertisement' and display a window explaining what information has been used to select that ad, a draft report by the European Parliament has said.

Search engines would not be allowed to sell brand names as advertising keywords without a brand owner's authority and web mail providers would be banned from displaying adverts that are based on the content of private email messages under the plans..

The draft report (13-page / 165KB PDF) recommends imposing stricter regulation on behavioural advertising than the systems currently suggested by industry and will be voted on by the full Parliament next month.

MEP Philippe Juvin produced the recommendations which have been adopted by the Parliament's Internal Market and Consumer Protection Committee.

The report calls on the Commission, among other things, to:

  • insert the words ‘behavioural advertisement’ into the relevant online advertisements, along with a window containing a basic explanation of this practice;
  • prohibit the systematic, indiscriminate sending of text message advertisements to all mobile phone users within the coverage area of an advertising poster equipped with Bluetooth technology without their prior consent;
  • prohibit the content of private e-mails being read by a third party for advertising purposes;
  • require advertisements sent by e-mail to contain an automatic link enabling the recipient to refuse all further advertising
    ensure the application of techniques making it possible to distinguish advertising tracking cookies, for which free and explicit prior consent is required, from other cookies;
  • encourage the use of default settings – for computer systems sold to the public and for social networking services – that meet the strictest data protection standards;
  • develop an EU website labelling system modelled on the European Privacy Seal, certifying a site’s level of data protection;
  • restrict online alcohol advertising to the websites of industry professionals, local authorities and tourist offices, while prohibiting intrusive advertising practices; and
  • modify the limited liability regime for information society services in order to make the sale by search engines of registered brand names as advertising keywords subject to prior authorisation from the owner of the brand name in question.

Behavioural advertising uses information from web browser cookies to attempt to match ads to a person's perceived interests based on their use of the web. The Parliament's draft report did not elaborate on the nature of the explanatory window that should appear alongside such ads.

Advertising trade bodies such as the Interactive Advertising Bureau have proposed much less onerous schemes for identifying which ads use this tracking technology. The IAB and others have backed an icon made up of an 'i' in a circle, which would function as a link to an information page, which would be far less intrusive than the measures proposed by MEPs.

The report notes that "while the Unfair Commercial Practices Directive (UCPD) of 2005 does provide an essential legal framework for combating misleading and aggressive advertising, several difficulties are already apparent, notably regarding the new, more pervasive forms of advertising arising from the development of new advertising practices and technologies on the internet," according to a Parliament statement.

"Member States should 'encourage the emergence of forum observers/moderators who are alert to the dangers of hidden advertising", the report says, as well as running information campaigns to warn consumers of such 'hidden' forms of advertising," said the statement.

"The report calls on the Commission and Member States to ensure that the UCPD, which does not yet cover the development of 'hidden' internet advertising, is properly applied," said the statement. "'Hidden advertising', which takes place in forums where consumers post comments to one another about goods or services (e.g. recommendations for hotels), may not only mislead consumers, but can also ruin a company's reputation with just one click."

The Parliament said it "Deplores the development of ‘hidden’ internet advertising that is not covered by the UCPD […] in the form of comments posted on social networks, forums
and blogs, the content of which is difficult to distinguish from mere opinion". The UCPD does not apply to consumer-to-consumer advertising.

The Committee adopted the report, which will progress for a vote by the whole Parliament in December.

The Parliament also voiced concern about the development of advertising practices that it regards as intrusive, "such as reading the content of emails, using social networks and geolocation, and retargeted advertising".

Struan Robertson, a technology lawyer with Pinsent Masons and editor of OUT-LAW.COM, called said he sees the proposal as disproportionate.

"The European Parliament appears to feel that consumers are being harmed by behavioural advertising," he said. "It has characterised the practice as intrusive and wrong, yet it has not articulated the harms being caused. If actual harms are found to exist that are not controlled by current laws, then yes, there is a problem that merits proportionate action from Parliament."

"But that case has not been proved and instead the Parliament is proposing a warning that risks scaring people away from websites and services that only exist for free because they are funded by advertising. Transparency is important, but the message shouldn't cause unnecessary alarm."