Federal Trade Commission Announces Settlement In Online Behavioral Advertising Case: Mandates Use of “In Ad” Disclosure


On March 14, 2011, the Federal Trade Commission (FTC) announced a settlement with Chitika, Inc.,1 resolving its investigation of Chitika’s allegedly deceptive disclosures concerning its practice of tracking consumers’ online activities for behavioral advertising purposes, as well as its inadequate opt-out mechanism. According to the FTC complaint, Chitika offers an online behavioral advertising service that acts as an intermediary between website publishers and advertisers that wish to have their ads placed on websites. When consumers visit a website within the Chitika network of publishers, Chitika sets cookies in their browsers, which it uses to track the consumers’ searches, the websites they visit, and the content they view. This information is used to furnish consumers with advertising targeted to their interests.

Chitika’s privacy policy explained the company’s use of cookies for purposes of such targeted advertising, stating “You can opt-out of receiving Chitika cookies by using the button below.” Following this statement was an “Opt-Out” button, and consumers who clicked on it received a message stating, “You are currently opted out.” To implement this choice, Chitika set an “opt-out cookie” in the consumer’s browser. The opt-out cookie ensured that no additional cookies were set in the consumer’s browser, no additional information was added to a previously set Chitika tracking cookie, and the data previously placed in the cookie was not used to target advertisements to the consumer.

However, according to the FTC’s complaint, for more than a year and a half, the opt-out cookies Chitika delivered were set to expire after ten days, a fact that was not disclosed to consumers. The FTC concluded that the practice of an opt-out that did not last for a reasonable period of time rendered the privacy policy statements regarding the consumer’s ability to opt out to be false or misleading.

Please see full alert below for more information.

LOADING PDF: If there are any problems, click here to download the file.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

© Wilson Sonsini Goodrich & Rosati | Attorney Advertising

Written by:


Wilson Sonsini Goodrich & Rosati on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:

Sign up to create your digest using LinkedIn*

*By using the service, you signify your acceptance of JD Supra's Privacy Policy.

Already signed up? Log in here

*With LinkedIn, you don't need to create a separate login to manage your free JD Supra account, and we can make suggestions based on your needs and interests. We will not post anything on LinkedIn in your name. Or, sign up using your email address.