Earlier this week, the Federal Trade Commission announced that it has reached a settlement with Chitika, Inc., an ad network that tracks a user’s online activities in order to deliver advertising targeted to the individual user’s interests.  In its complaint, the FTC claimed that Chitika made statements that (1) users could opt out of targeted advertising by clicking on an “Opt-Out” button and (2) users who clicked on the button “are currently opted out.” The FTC also alleged that Chitika’s cookie-based opt-out mechanism lasted only 10 days, and that Chitika did not inform users about the duration of the opt-out.  The FTC claimed that Chitika’s statements constituted a representation that Chitika’s opt-out will last for a “reasonable period of time,” and that because 10 days is not a reasonable period, its statements were deceptive. 

As part of the settlement, Chitika must include a hyperlink in every targeted ad that takes consumers to a clear opt-out mechanism.  User opt outs must be effective for at least five years. 

The settlement may help inform industry’s ongoing development of innovative opt-out tools for consumers to control whether information is used for targeted advertising.  The Consent Order not only suggests that five years is a “reasonable” period of time for a user’s opt-out selection to last, but it also reaffirms that cookie-based opt-out methods are an acceptable means for allowing consumers to opt out of targeted adverting.   Importantly, the Consent Decree carves out from the five-year effective period scenarios where a user deletes his or her cookies or takes deliberate action to disable the mechanism. 

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Photo of Lindsey Tonsager Lindsey Tonsager

Lindsey Tonsager helps national and multinational clients in a broad range of industries anticipate and effectively evaluate legal and reputational risks under federal and state data privacy and communications laws.

In addition to assisting clients engage strategically with the Federal Trade Commission, the…

Lindsey Tonsager helps national and multinational clients in a broad range of industries anticipate and effectively evaluate legal and reputational risks under federal and state data privacy and communications laws.

In addition to assisting clients engage strategically with the Federal Trade Commission, the U.S. Congress, and other federal and state regulators on a proactive basis, she has experience helping clients respond to informal investigations and enforcement actions, including by self-regulatory bodies such as the Digital Advertising Alliance and Children’s Advertising Review Unit.

Ms. Tonsager’s practice focuses on helping clients launch new products and services that implicate the laws governing the use of endorsements and testimonials in advertising and social media, the collection of personal information from children and students online, behavioral advertising, e-mail marketing, artificial intelligence the processing of “big data” in the Internet of Things, spectrum policy, online accessibility, compulsory copyright licensing, telecommunications and new technologies.

Ms. Tonsager also conducts privacy and data security diligence in complex corporate transactions and negotiates agreements with third-party service providers to ensure that robust protections are in place to avoid unauthorized access, use, or disclosure of customer data and other types of confidential information. She regularly assists clients in developing clear privacy disclosures and policies―including website and mobile app disclosures, terms of use, and internal social media and privacy-by-design programs.