Legal and Ethical Challenges of Online Behavioral Targeting in Advertising

Abstract

Online behavioral targeting (OBT), the tracking of a consumer's online activities in order to develop a behavioral profile of the consumer, is a rapidly growing technique that enables advertisers to deliver relevant messages. While OBT provides many advantages to shoppers and advertisers alike, the practice has the technological potential to violate consumers’ privacy rights to a dangerous and unprecedented degree. Still, OBT is poorly understood by most consumers, is often nontransparent and deceptive, and in many cases does not even provide a reasonable chance to opt out. Due to OBT's relative newness, few laws, regulations, and policies, as well as in-depth ethical analyses of the practice, exist. Actions by the Federal Trade Commission (FTC), however, provide a notable exception. In a series of reports, in particular since 2009, the agency has engaged in dialogs with various stakeholders about OBT and the dangers it poses to consumers. Its efforts have also included legal enforcement activities. Within the context of these developments our article presents the evolution of the broader legal environment, including an ethical analysis of the FTC's efforts. Our objective is to shed light on the issue from a normative perspective and to assist online advertisers as well as regulators searching for guidelines and policies on how to use OBT in a responsible manner.