Targeted Advertising in the Crosshairs: New Bill Seeks to Ban Many Forms of Targeted Advertising | Kelley Drye & Warren LLP

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On Tuesday, congressional Democrats unveiled a new bill to ban a wide range of targeted ads. The Surveillance Advertising Ban Act would prohibit ad tech companies from using consumers’ personal information to target ads, with some exceptions. It would also prohibit advertisers from using third-party data, or data about someone’s membership in a protected class, to target ads. The bill would authorize the FTC, state attorneys general and private litigants to enforce the law, and the FTC to write implementing rules.

The effort, led by Sen. Cory Booker (D-NJ) and congresswomen Anna Eshoo (D-CA) and Jan Schakowsky (D-IL), comes at a time when unprecedented regulatory developments are impacting the ad technology industry, including the enactment of new state privacy laws in California, Virginia, and Colorado with provisions regulating the industry. While these privacy laws have focused on allowing consumers to make choices about sharing data for targeted advertising purposes, the Surveillance Advertising Ban Act would impose prohibitions general on such advertising. As we describe here, the FTC has also announced that it is developing a rule targeting “surveillance-based business models,” although the outlines of that rule are still unknown.

In a press release, Senator Booker explained that “surveillance advertising is a predatory and invasive practice. Hoarding people’s personal data not only violates privacy, but also promotes the spread of misinformation, domestic extremism, racial division and violence. Echoing Booker, Rep. Eshoo said the practice “fuels misinformation, discrimination, voter suppression, invasions of privacy and so many other harms.” Rep. Schakowsky, who chairs the House Energy and Commerce Consumer Protection Subcommittee, said the practice “exacerbates manipulation, discrimination, misinformation and extremism.”

Given the dramatic changes the bill would impose on the marketplace, it’s no surprise that industry groups have already strongly criticized it. In a press release today, the IAB said the bill “would disenfranchise businesses that advertise on the Internet, and the hundreds of millions of Americans who use it every day, to find exactly what they need, quickly”, and that it could “eliminate Internet commerce almost entirely.

Contextual ads would be allowed

In a briefing note, lawmakers wrote that they recognize some benefits of online advertising, but believe advertisers do not need to use personal data to effectively target advertising. “Advertising enables many of the ‘free’ Internet products that exist today, and it enables small businesses, nonprofits and political challengers to reach customers, funders and voters,” the lawmakers wrote. But, according to the brief, “targeted advertisements for advertisers rather than contextual advertisements” (i.e. advertisements based on the content of a website that the consumer is viewing, as opposed to personal information or the consumer’s browsing history). Therefore, the bill would allow contextual advertising.

Some first party ads would be allowed

As written, the bill focuses primarily on banning targeted advertising based on third-party data rather than first-party data. For example, brands could target their own customers using first-party data, but not third-party data. Brands would also be able to provide ad-tech companies with first-party data for targeted advertising (including for retargeting purposes), as long as the advertiser certifies compliance with the proposed law. However, the bill would strictly prohibit any targeting by advertisers based on an individual’s membership in a protected category.

The bill also emphasizes the targeting of consumers based on “personal information,” defined as data linked or reasonably linked to an individual or connected device. This definition seems to leave room for targeted advertising based on anonymized data in one form or another.

Here is a summary of what would be prohibited and permitted under the new legislation:

Summary of conduct that would be prohibited

  • Ad tech companies couldn’t create segments with third-party data: This means that they could not provide advertisers or third parties with any personal information for ad serving targeting purposes, including: (1) lists of individuals or devices; (2) contact details; (3) unique identifiers; and other personal information, such as browsing history.
  • Advertisers could not target ads based on protected classes: Protected classes would include race, color, ethnicity, national origin, religion, sex, sexual orientation, gender identity, gender expression, family status, or actual disabilities or perceived.
  • Advertisers could not target ads based on third-party data: This data would include information from data brokers.
  • Advertisers could not hire an ad technology company to target ads based on third-party data: This means ad tech companies could not (a) target ads based on third party data Where (b) allow an advertiser or third party to do so.

Summary of conduct that would be permitted

  • Advertisers can target ads based on first-party data: The bill does not restrict this practice, as long as the advertisements do not target protected classes.
  • Advertising may be targeted to a general location: The bill specifically exempts advertising based on an individual’s general location (ie state or municipality but not zip code).
  • Contextual advertising: Ad tech companies could still facilitate ad serving based on context or search terms. However, they could not use the information they collect from the contextual advertisement to target further.
  • Hiring an ad tech company to target ads based on first-party data: This would be allowed, but only if the ad technology company provided written certification to the advertiser that the ads were not targeted based on protected classes or third-party data.
  • Advertising targeting using non-personal information: As noted above, the bill likely leaves room for ad tech vendors to develop ways to target advertising without using personal information that identifies or can identify a person or device. If enacted, the legislation could accelerate efforts by some companies to expand ad targeting without using, using privacy-enhancing technologies like cohort-based targeting or secure multi-party computing.

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The prospects of Congress in fact enact this bill (or a similar bill) are not at all clear at the moment. However, the bill is another sign that digital advertising is under scrutiny and that policymakers are pushing companies to provide greater transparency and stronger privacy protections for the collection, use and sharing of information. personal data of consumers for advertising purposes.

We will continue to monitor data privacy bills as they move through the legislative process and post updates here.

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