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Online Retail Group Urges Caution On Behavioral Advertising Guidelines

Shop.org says consumers aren't hurt by tracking technology and the Federal Trade Commission's report on the subject was too broad.
The digital division of the National Retail Federation wants the Federal Trade Commission proceed with caution in setting voluntary guidelines for behavioral advertising.

Shop.Org sent a 14-page letter to the FTC this week saying that consumers are not hurt by technology that tracks how they shop. It explained that opposition isn't as strong as critics claim and that tracking technology provides benefits.

"Retailers have long understood that keeping their customers happy is the most essential part of building positive, long-term business relationships," Scott Silverman, executive director of Shop.org, explained. "The FTC's proposed guidelines could have the effect of undoing many online retail best practices and innovations that customers inherently value."

The FTC recently announced that it favors self-regulation and government guidance, but Shop.org said the business community would probably view the guidelines as regulations. The group expressed fear that "perceived violations" could be considered "unfair and deceptive," under the nation's fair trade laws.

Shop.org said consumers react positively to Web sites like Amazon.com and Netflix.com, which recommend books and movies based on people's previous selections.

The group said the FTC should study behavioral advertising for negative effects on consumers and note problems with existing industry practices.

Shop.org said the FTC's workshop on behavioral advertising in November "failed to build a complete record of the issue" and the term "behavioral advertising was broadly defined." It said a report issued afterward "seems to sweep in a wide array of privacy issues that go well beyond simply moving forward a discussion about self-regulation of online advertising practices."

The report indicated that consumers may be unaware their Internet activities are monitored so advertisers can target them with more effective products and ads. Shop.org said that most online retailers tell consumers about the practice in privacy policies and offer the option of refusing to have their information collected. The group said that many retailers also tell online shoppers how to use their computers' privacy preferences.

"Our customers know what type of information is being collected and how that information is being used," the group explained in the letter.

Shop.org said only 6% of retail consumers opted out of marketing e-mails last year.

Finally, the group opposes the FTC's idea to recommend that online retailers deliver pop-up notifications when collecting information.

"We all know how frustrating pop-ups can be when you are simply trying to read the latest headlines on a newspaper website," Shop.org said. "Now transfer that experience to a retail website where customers have come to expect a seamless experience from homepage to checkout. ... These types of 'hiccups' could be devastating."