Advertising Law Alerts

February 6th, 2013

FTC Sanctions Ad Network for History Sniffing

In December, an FTC order barred Epic Marketplace, Inc. from continuing a practice known as history sniffing. The technology employed by the company allowed them to track sensitive information including certain medical and financial information for millions of consumers. According to the terms of the settlement, the company must cease those practices and destroy any information collected previously and, upon FTC request, submit to auditing of data collection practices, consumer data complaints, and the company's terms of use agreements for three years. The settlement also bars Epic Marketplace from making future misrepresentations regarding the collection of such information.

Epic Marketplace is a large advertising network with connections to more than 45,000 websites. Consumers who visited these sites received a cookie, which stored information about their online practices including sites they visited and the ads they viewed. Epic's privacy policy only disclosed that it would gather information about the sites viewed within the Epic Marketplace network, not third-party sites. However, the technology employed by the company could track previously viewed sites. In many web browsers, links that that been used by a viewer are a different color than links that have not been viewed. By monitoring the color of links on sites within its network, Epic Marketplace was able to gather information about a user's interest in third-party sites as well. The FTC determined that this undisclosed history sniffing practice was deceptive and allowed Epic Marketplace to know if a consumer had visited more than 54,000 domains, including pages relating to fertility issues, impotence, menopause, incontinence, disability insurance, credit repair, debt relief, and personal bankruptcy.

The FTC complaint states that depending on the domains a consumer visited, Epic assigned the consumer an advertising interest segment. These interest segments included categories such as "Incontinence," "Arthritis," "Memory Improvement," and "Pregnancy-Fertility Getting Pregnant." After an interest segment was assigned, Epic targeted ads to consumers based on those interests. 

Website and mobile application operators should be mindful of their data collection and use practices, especially regarding behavioral advertising. Many behavioral technologies are new to the marketplace and most likely are not in alignment with previous privacy policy disclosures. This case underscores the need for close cooperation between legal and technical departments within organizations. Companies should monitor new technology used in advertising, make clear disclosures regarding privacy practices, and schedule regular privacy policy reviews to make certain that disclosures are consistent with FTC regulatory guidance.

If you have any questions about this FTC action, or about any other advertising law issues, please contact Greg Boyd at (212) 826 5581 or gboyd@fkks.com, or any other member of the Frankfurt Kurnit Advertising, Marketing and Public Relations Group.