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November 9th, 2011
Video Ad Network Settles FTC Privacy Complaint
The Federal Trade Commission's proposed settlement with the online advertiser ScanScout, announced yesterday, offers a timely reminder of the importance of ensuring that your company's stated privacy practices align with how your company actually collects and uses information.
ScanScout is a video advertising network that places advertisements on websites and, in the process, tracks online browsing behavior via cookies. This tracking enables ScanScout to serve advertisements that correspond to users'' interests. According to the FTC complaint, ScanScout''s website privacy policy included some disclosure about the use of cookies to track users' behavior. Notably, for several years, ScanScout's privacy policy stated, "You can opt out of receiving a cookie by changing your browser settings to prevent the receipt of cookies."
The problem, according to the FTC, is that during the period this disclosure was provided in ScanScout’s privacy policy, ScanScout actually used Flash local shared objects (a.k.a "Flash Cookies") to track user behavior, and changing browser settings did not remove or block the Flash cookies used by ScanScout. As a result, even if people followed the information provided in ScanScout's privacy policy, and changed their browsers' privacy settings to delete or block cookies, ScanScout's Flash cookies were unaffected, and ScanScout could still collect browsing data and serve targeted ads.
Under the terms of the proposed settlement, ScanScout is (i) barred from making further misrepresentations about its information practices and (ii) required to take steps to improve disclosure of its data collection practices and to provide a user-friendly mechanism to allow consumers to opt-out of being tracked.
If your business has an online presence, it is advisable to periodically revisit your published privacy statements to ensure that they remain accurate and up-to-date, including disclosures regarding flash cookies.
Read FTC's full press release - Online Advertiser Settles FTC Charges ScanScout Deceptively Used Flash Cookies to Track Consumers Online.
If you have any questions about advertising or privacy-related matters, please contact Jeffrey A. Greenbaum at (212) 826 5525 or jgreenbaum@fkks.com, or any other member of the Frankfurt Kurnit Technology, Digital Media, and Privacy Group or Advertising Group.
Other Advertising Law Alerts
What the Advertising Industry Can Learn from Kim Kardashian’s Settlement with the SEC
On October 3, 2022, the Securities and Exchange Commission (SEC) announced that it entered into a $1.26 million settlement with Kim Kardashian over her social media promotion of the EMAX token without disclosing payment she received from token issuer, EthereumMax. The matter provides important lessons for advertisers. Read more.
October 10 2022
Get Ready for California’s New “Automatic Renewal” Rules
California recently amended its Automatic Purchase Renewals law. The amended statute - effective July 1st -- require marketers to provide consumers of automatic renewal or continuous service offers with more information and easier ways to terminate. Read more.
June 22 2018
“Made in the U.S.A.” Claims Continue to be Scrutinized
In 2016, California amended Section 17533.7 of the California Business and Professions Code ("Section 17533"), liberalizing the standard for selling products labeled "Made in U.S.A" to California consumers. Read more.
June 4 2018
