FTC staff issued a statement today proposing four “self-regulatory” principles to guide businesses engaged in online behavioral advertising. FTC staff also seeks public comments on these principles as well as additional information on what other uses businesses are making of online tracking data. Interested parties can submit comments by February 22, 2008.

The statement, titled “Online Behavioral Advertising: Moving the Discussion Forward to Possible Self-Regulatory Principles” follows from the FTC’s town hall meeting held in early November 2007. There, FTC considered privacy issues raised by behavioral advertising and heard from consumer interest groups and businesses’ alike.

The self-regulatory approach taken by FTC staff recognizes the benefits behavioral advertising provides. Specifically, FTC staff recognizes that ad-supported content makes newspapers and other valuable information from around the world more readily available to consumers online and that many consumers value personalized ads. FTC staff is, however, concerned that behavioral advertising and the related data collection “is largely invisible and unknown to consumers.” The four principles FTC staff has proposed to address concerns over transparency and consumer choice state that:

(1) every website that collects data for behavioral advertising should include “a clear, concise, consumer-friendly and prominent statement” that (a) consumer data is being collected online for behavioral advertising, and (b) consumers can exercise choice on collection of their data for such purposes, with a “clear, easy-to-use, and accessible method” provided for doing so;

(2) a company engaged in behavioral targeting should reasonably secure the data collected and only retain it “as long as necessary to fulfill a legitimate business purpose or a law enforcement need”;

(3) a company should obtain consumers’ “affirmative express consent” if it is going to use personal data for a materially different purpose than was disclosed when the data was collected; and

(4) a company should obtain “affirmative express consent” before collecting “sensitive” consumer data (such as health data, sexual orientation, and children’s data). FTC staff is seeking further comment on the types of data that constitute “sensitive” information and whether instead of consumer choice, a prohibition on collection of such data would be a better approach;

FTC staff seeks comments on the four proposed principles generally, including their feasibility and the costs and benefits of offering choices for behavioral advertising. FTC also staff seeks additional information on the secondary uses of tracking data that extend beyond behavioral marketing. Specifically, FTC staff seeks information on what secondary uses of tracking data is occurring, which of those uses raises privacy concerns, whether those concerns extend to non-personally identifiable information in addition to personally identifiable information, and whether some heightened form of protection relating to secondary uses is warranted.

The FTC vote to approve release of the principles was 5-0. The related FTC press release is available here.