Online advertiser ScanScout has agreed to settle Federal Trade Commission charges that it deceptively claimed that consumers could opt out of receiving targeted ads by changing their computer’s web browser settings to block cookies. In fact, ScanScout used Flash cookies, which browser settings could not block. The proposed settlement bars misrepresentations about the company’s data-collection practices and consumers’ ability to control collection of their data. It also requires that ScanScout take steps to improve disclosure of their data collection practices and to provide a user-friendly mechanism that allows consumers to opt out of being tracked.

The FTC investigated ScanScout as part of its ongoing effort to protect consumers’ privacy online. ScanScout is an advertising network that places video ads on websites for advertisers. ScanScout engages in behavioral advertising – it collects information about consumers’ online activities and then serves video ads targeted to their interests.

According to the FTC complaint, from at least April 2007 to December 2010, ScanScout’s website privacy policy discussed how it used cookies to track users’ behavior. The privacy policy stated, “You can opt out of receiving a cookie by changing your browser settings to prevent the receipt of cookies.” However, changing browser settings did not remove or block the Flash cookies used by ScanScout, the FTC charged. The claims by ScanScout were deceptive and violated the FTC Act, the complaint alleged.

The proposed settlement will bar ScanScout from misrepresenting the extent to which consumers’ data is collected, used, shared, or disclosed. Within 30 days after the settlement order becomes effective, ScanScout must place a prominent notice on its home page stating, “We collect information about your activities on certain websites to send you targeted ads. To opt out of our targeted advertisements, click here.” The hyperlink must take consumers to a mechanism that allows them to prevent the company from collecting information that can identify them or their computer; redirecting their browser to third parties that collect data without their approval; and associating any previously collected data with them. The consumer’s choice must last for at least five years, unless the consumer changes it.

The proposed order also requires that, within close proximity to the consumer opt-out mechanism, the company must disclose that it collects consumer data to send targeted ads; that opting out will halt the collection; the current status of the consumer’s choice – for example, whether he or she had opted in or opted out; and circumstances – such as changing the browser a consumer uses – that could automatically change their choice.

In addition, within or immediately next to its targeted display ads, ScanScout must embed a hyperlink to take consumers to the choice mechanism that allows consumers to opt out of receiving targeted ads. Because technical limitations currently prevent ScanScout from embedding a hyperlink in all of its video ads, the order requires the company to undertake reasonable efforts to develop and implement a hyperlink in its video ads and to report regularly to the FTC on its progress.

Source: FTC

In the Matter of ScanScout, Inc., a corporation;
FTC File No. 1023185

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