Targeting Bad Behavior: Why Federal Regulators Must Treat Online Behavioral Marketing as Spyware

The FTC has sanctioned more than a dozen companies during the past two years for privacy violations involving the improper installation of spyware software on personal computers. The spyware software allowed companies to watch and control consumers\u27 online activities, either without the consumer\u27s knowledge or with the consumer\u27s knowledge but without reasonable means for the consumer to stop it. The practice of online targeted advertising raises similar privacy issues as the use of spyware software because it also involves behind-the-scenes tracking, which most consumers never notice. Online targeted advertising allows marketing companies to engage in the same behavior as companies who use Spyware - watching the consumer\u27s internet actions, often without the consumer\u27s knowledge or with the consumer\u27s knowledge but without meaningful consent or without offering the consumer the ability to stop it. Nonetheless, the FTC has not brought a single action against a company that engages in improper online targeted advertising. The FTC\u27s inaction highlights the need for legislative action and appropriations that spur the FTC to crack down on inappropriate online targeted advertising. Aside from federal privacy laws that regulate financial institutions and a few state laws that require certain privacy notices to appear on websites, online targeted advertising is largely unregulated, which permits abuses. This paper will explain online targeted advertising and its dangers to privacy; examine the limitations of current legislation, proposed legislation and self-regulation; review FTC cases on spyware software to demonstrate parallels to online targeted advertising; and suggest a proposed federal law and FTC regulations specifically aimed at targeted advertising