OFT broadens online advertising probe

Following an initial consultation into the matter, the consumer watchdog is now gathering evidence for an inquiry into online behavioural advertising and pricing practices
Written by Tom Espiner, Contributor

The Office of Fair Trading has deepened its probe into the online targeting of advertising and prices.

The government watchdog on Thursday started a new two-part inquiry into the pricing side of 'behavioural advertising' — that is, tracking the websites people browse in order to deliver ads targeted to their interests. The probe builds on a consultation that the OFT began on 19 August.

The first part of the inquiry will look at practices where prices are tailored individually to the user, while the second will study the advertising of prices that may mislead consumers, including 'drip' pricing, where prices increase incrementally during the buying process.

"It is very important that the OFT's approach to potentially misleading practices remains well-informed by a sound evidence base, so we effectively protect consumers while allowing firms to compete freely," said OFT senior director Heather Clayton in a statement.

One possible outcome of the inquiry launched yesterday is investigation and enforcement action against companies thought to be breaching consumer law, the OFT said. Alternatively, those companies could be given a clean bill of health.

The Internet Advertising Bureau (IAB), an industry body that represents 440 companies involved in digital advertising, told ZDNet UK on Friday that it had submitted evidence to the OFT consultation, and would continue to assist the watchdog.

"Where practices are potentially misleading consumers, we will work with the OFT," said IAB head of regulatory affairs Nick Stringer.

On Thursday, the cross-party All Party Parliamentary Communications Group (apComms) recommended in a report that websites using behavioural advertising should allow users to opt into services, rather than opt out of ads.

"If a behavioural-advertising system is 'opt-out', it means that people who dislike the idea have to explicitly request that they are not tracked," the report's authors said in a statement.

"If the system is 'opt-in', then people who like the idea of more relevant adverts have to explicitly request that their activities are monitored... Behavioural advertising systems should only be allowed to operate on an 'opt-in' basis, and people should be made properly aware of what they are agreeing to."

The IAB said it was disappointed in the outcome of the apComms report. "We disagree with apComms's recommendation," Stringer said. "Users would prefer to see relevant advertising."

Stringer added that websites using opt-in behavioural advertising would have to present the user with a pop-up dialog box every time a site was visited, if the report's recommendations are followed.

The IAB has recommended its own guidelines to advertisers, stating that behavioural advertising should be opt-out.

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