Privacy Law and Online Advertising: Legal Analysis of Data Gathering By Online Advertisers Such As Double Click and NebuAd
Prepared for Members and Committees of Congress
To produce revenue, websites have placed advertisements on their sites. Advertisers will pay a
premium for greater assurance that the advertisement they are purchasing will be seen by users
that are most likely to be interested in the product or service offered. As a result, technology has
been developed which enables online advertisements to be targeted directly at individual users
based on their web surfing activity. This practice is widely known as “behavioral” or “e-havioral”
This individual behavioral targeting has raised a number of privacy concerns. For instance,
questions have been asked whether personally identifiable information is being collected; how the
information collected is being protected; and whether current laws are being violated if data are
being collected without the consent of the parties involved. It is often unclear whether current
laws, such as the Electronic Communications Privacy Act and the Communications Act, apply to
online advertising providers that are collecting data through click tracking, capturing search
terms, and other methods. However, it is likely that in many cases these laws could be held to
apply to such activities and that these methods of data collection would be forbidden unless
consent is obtained from one of the parties to the communication. This report will examine the
application of these statutes to online behavioral advertising in more detail.
There are no current federal regulations specific to online behavioral advertising. The Federal
Trade Commission (FTC) has put forth a number of guiding principles intended to aid the
industry in creating self-regulatory principles. The FTC maintains that self-regulation is
preferable to government intervention in this case. Organizations such as the Network
Advertising Initiative have created policies which many online advertising providers have
pledged to follow that represent industry best practices for protecting the privacy of web users.
The 110th Congress has expressed interest in this issue. In July of 2008, both the Senate
Committee on Commerce, Science, and Transportation and the House Energy and Commerce
Committee held hearings to examine the data collection practices of NebuAd, an online
advertising provider that collects data on web users by using “deep packet inspection.”
Representatives Markey and Stearn sent a letter to 33 companies (such as AT&T, Comcast, and
Google) on August 1, 2008, requesting additional information about their usage of “deep packet
inspection” to collect data on users of their services. The Senate Commerce Committee held
another hearing addressing broadband providers and consumer privacy on September 25, 2008.
Introduction and Technical Background..........................................................................................1
Electronic Communications Privacy Act.........................................................................................2
The Online Advertising Provider..............................................................................................2
The Internet Service Provider...................................................................................................3
The Consent Exception to ECPA..............................................................................................4
Data Collection Agreements Between Website Operators and Online Advertising
Providers .......................................................................................................................... 5
Data Collection Agreements Between ISPs and Online Advertising Providers..................6
Section 631 of the Communications Act.........................................................................................7
Federal Trade Commission Online Advertising Principles...........................................................10
Network Advertising Initiative Standards.....................................................................................10
Author Contact Information...........................................................................................................11
Many website operators produce income by selling advertising space on their sites. Advertisers
will pay a premium for ads that are more likely to reach their target demographic. In other media,
such as broadcasting, advertisers engage in targeting by purchasing advertising time during
programs that those who buy their products are most likely to watch. The Internet presented new
challenges and opportunities for advertisers to reach their target audiences. Technology has been
developed that allows advertisers to target advertising to individual web users. This is seen as an
advantage for advertisers, because, rather than aiming their ads at groups of people who visit a
particular site, their ads are aimed at the individual user. This maximizes the odds that the user
who sees the ad will be interested in the product or service it touts. Targeting advertising to
individuals involves gathering information about that individual’s web surfing habits. The
collection of this information has raised concerns among some over the privacy of web activity,
particularly if the data collected are personally identifiable. Some have alleged that online
advertisers are violating privacy laws by collecting these data.
In online advertising’s simplest form, a commercial website rents out “space” on its site to 1
another website which places a hot link banner advertisement in that space. The banner ad, when
clicked, sends the user directly to the advertiser’s website. In this scenario, no matter who visits a
particular website, that user will see the same advertisement, regardless of whether he/she may be
interested in that product or service. However, many advertisers will pay a premium for the
increased likelihood that users viewing their advertisement would be interested in the product or
service offered. As a result, technology has developed to more accurately target online ads to the
Online advertising providers, such as DoubleClick and NebuAd, have developed the ability to
target ads to individual Internet users who would be most interested in seeing those ads. These
techniques are known generally as “behaviorally targeted advertising.” Behaviorally targeted
advertising delivers ads that are geared toward specific Internet users by tracking certain, though
not necessarily all, web activity of each user and inferring each user’s interests based on that
activity. Most online advertising providers monitor individual Internet users by placing a
“persistent cookie” on that user’s computer. “Cookies” are small text files that can store
information. “Persistent cookies” reside on a hard drive indefinitely, unlike most “cookies” which
expire when a browser window is closed. Generally, online advertisers give the “cookies” they
place on user computers a unique alphanumeric code that identifies that user to the advertising
company purportedly without revealing any personally identifiable information. “Cookies” may
be placed on an individual’s computer when an individual visits a website affiliated with the
online advertisement supplier; however, the exact moment of “cookie” placement may be
different when the relevant advertising partnership is between a user’s Internet Service Provider
(ISP) and an online advertising provider.
1 For a basic description of the technology involved in delivering behaviorally targeted advertising, please see the
following source material: In re DoubleClick, Inc. Privacy Litigation, 154 F.Supp. 2d 497 (S.D.N.Y. 2001), In re st
Pharmatrak Privacy Litigation, 329 F.3d 9 (1 Cir. 2003), and Paul Lansing and Mark Halter, Internet Advertising and
Right to Privacy Issues, 80 U. Det. Mercy L. Rev. 181 (2003). See also, Testimony of Mr. Robert R. Dykes, CEO of
NebuAd Inc., Privacy Implications of Online Advertising: Hearing Before the S. Comm. On Commerce, Science, and th
Transportation, 110 Cong. (2008)(hereinafter NebuAd Testimony), available at http://commerce.senate.gov/public/
Once the cookie is in place, it gathers certain information related to that user’s online activity on a
continuous basis and relays that information to the online advertising provider. The advertising
provider assembles that data into an individual profile that is then used to target advertising to
that user’s interests. This process is ongoing, but, in general, the user may opt out of continued
monitoring at any point, assuming they are aware that it is occurring. In most types of
behaviorally targeted advertising technology, the advertising firm gathers information about user
activities on websites that are affiliated with the advertising firm. The behavioral advertiser
DoubleClick, for instance, operates on this model. Information on individual users is transmitted
to DoubleClick by DoubleClick’s clients. In a newly emerging behavioral advertising model, the
advertising provider is attempting to partner with the users’ ISP. This partnership will presumably
grant the advertising provider access to all web activity in which an ISP’s subscribers engage.
Both of these types of potential partnerships raise a number of questions regarding potential
violations of existing privacy protections in federal law.
Concerns have been raised that online advertising providers, websites, and ISPs that agree to
collect certain data generated by Internet traffic to behaviorally target advertising may be
violating the Electronic Communications Privacy Act (ECPA)100 Stat. 1848, 18 U.S.C. 2510-2
2521. ECPA is an amendment to Title III of the Omnibus Crime Control and Safe Streets Act of
communications unless an exception to the general prohibition applies. This section will discuss
the potential application of ECPA to online advertising providers and the potential application of
ECPA to ISPs.
The first question that must be addressed is whether ECPA applies to the activities of online
advertising providers. Online advertising providers are acquiring information such as the fact that
a user clicked on a particular link (an action which is the equivalent of asking the site providing
the link to send the user information), and they are acquiring that information while the 4
communication is in transit. Furthermore, these advertisers may acquire information, such as 5
words entered into a search engine or answers to online forms, while it is in transit. Under
ECPA, it is illegal, with certain enumerated exceptions, for any person to “intentionally intercept,
endeavor to intercept, or procure any other person to intercept or endeavor to intercept, any wire, 6
oral or electronic communication.” It is important to lay out the statutory definitions of each of
the key terms in order to assess whether the ECPA prohibition and/or any of its exceptions applies
to activities conducted by online behavioral advertisers.
2 Testimony of Ms. Leslie Harris, CEO of the Center for Democracy and Technology, Privacy Implications of Online
Advertising: Hearing Before the S. Comm. On Commerce, Science, and Transportation, 110th Cong. (2008)(hereinafter
CDT Testimony), available at http://commerce.senate.gov/public/_files/LeslieHarrisCDTOnlinePrivacyTestimony.pdf.
3 For a more detailed discussion of the history of ECPA, see CRS Report 98-326, Privacy: An Overview of Federal
Statutes Governing Wiretapping and Electronic Eavesdropping, by Gina Marie Stevens and Charles Doyle.
4 See e.g., NebuAd Testimony at 3-4.
5 See id.; In re DoubleClick, Inc. Privacy Litigation, 154 F.Supp. 2d 497 (S.D.N.Y. 2001).
6 18 U.S.C. §2511(1)(a).
• “Intercept” means the aural or other acquisition of the contents of any wire,
electronic, or oral communication through the use of any electronic, mechanical, 7
or other device.
• “Contents” when used with respect to any wire, oral, or electronic
communication includes any information concerning the substance, purport, or 8
meaning of that communication.
• “Electronic Communication” means any transfer of signs, signals, writing,
images, sounds, data, or intelligence of any nature transmitted in whole or in part
by a wire, radio, electromagnetic, photoelectronic, or photo optical system that 9
affects interstate or foreign commerce.
Because the advertisers record that a particular user requested information from a website by
clicking on a particular link or sent information to a website via a search entry or other method,
the advertisers appear to be “intercepting” the “contents” of those “electronic communications.” 10
Therefore, the interceptions are likely covered by ECPA.
Merely determining that this type of data acquisition by online advertisers is an interception for
the purposes of ECPA does not end the analysis. ECPA excepts certain communication
interceptions from its prohibition. The exception to ECPA that would most likely apply to these
types of interceptions is the exception that allows for interception of communications with the 11
consent of one of the parties. The question of when and how consent to the interception may be
given is addressed below.
The second question to be addressed is whether ECPA applies to ISP providers that would allow
online advertising providers to gather data from traffic over the ISP’s network. ECPA prohibits
any person or entity providing an electronic communications service from intentionally divulging
the “contents of any communications ... while in transmission on that service to any person or
entity other than an addressee or intended recipient of such communications or an agent of such 12
addressee or intended recipient.” The same definitions outlined in the previous section apply
here. This section seems to apply to ISPs that would agree to allow online advertising providers
to acquire portions of the web traffic of ISP customers, because the ISP would be allowing the
advertising providers to acquire the contents of communications while they are in transmission
7 18 U.S.C. §2510(4).
8 18 U.S.C. §2510(8).
9 18 U.S.C. §2510(12).
10 It is worth noting that there has yet to be a court case to decide definitively that ECPA applies to this type of data
collection. In the cases cited here, the online advertising providers made their cases by assuming, but not conceding, st
that ECPA applied to the data collection. See In re Pharmatrk, Inc. Privacy Litigations, 329 F.3d 9 (1 Cir. 2003); In re
DoubleClick, Inc. Privacy Litigation, 154 F.Supp. 2d 497 (S.D.N.Y. 2001).
11 “It shall not be unlawful under this chapter for a person not acting under color of law to intercept a wire, oral, or
electronic communication where such person is a party to the communication or where one of the parties to the
communications has given prior consent to such interception unless such communication is intercepted for the purpose
of committing any criminal or tortious act in violation of the Constitution or laws of the United States or any State.” 18
12 18 U.S.C. §2511(3)(a).
and neither the advertising provider nor the ISP would, in most cases, be the addressee or
intended recipient of the communications.
Again, determining that the data collection is likely an interception for the purposes of ECPA
does not end the analysis. An ECPA exception may apply. ISPs are allowed to intercept
communications while in transit if such interception is part of “any activity which is a necessary
incident to the rendition of [that service] or to the protection of the rights or property of the 13
provider of that service.” It does not seem likely that this exception applies to ISPs when
contracting with online advertising providers. Though the service for which they contract may
help keep the websites of the advertising provider’s clients free to the public by producing
advertising revenue, the interception is not necessary to maintain an ISP’s proper function or 14
solvency and, therefore, likely is not necessary to the rendition of Internet access service. ISPs
also are allowed to divulge the contents of a communication in transit “with the lawful consent of 15
the originator or any addressee or intended recipient of such communication.” If the ISPs obtain
the consent of their customers to intercept some of their online activities, this exception to ECPA
would seem to apply. Again, the questions of how and when consent may be obtained and what
constitutes “lawful consent” arise and are addressed in the following section.
As noted above, interception of electronic communications is not prohibited by ECPA if one of
the parties to the communications has consented to the interception. Consent is not defined by
ECPA; nor do precise instructions of how and when consent may be obtained under ECPA appear
in regulation. Therefore, it has been left largely to the courts to determine when consent to 16
intercept a communication otherwise covered by ECPA’s prohibitions has been granted. There
have been few cases dealing with ECPA’s application to online advertising providers and none
examining ECPA’s application to agreements between ISP providers and online advertising
providers. As a result, many open-ended questions exist regarding how to obtain adequate
consent. This section first will examine whether the consent exception to ECPA applies to data
collection agreements between online advertising providers and website operators. It will then
examine whether and how the consent exception applies to data collection agreements between
ISPs and online advertising providers.
13 18 U.S.C. §2511(2)(a)(i).
14 See, e.g., U.S. Census 2006 Annual Survey (Information Sector), Internet Service Providers—Estimated Sources of
Revenue and Expenses for Employer Firms: 2004 Through 2006 at 32, Table 3.4.1 (April 15, 2006) (indicating that
internet access service are responsible for the greatest percentage of revenue earned by ISPs) available at
http://www.census.gov/svsd/www/services/sas/sas_data/51/2006_NAICS51.pdf; Comcast Corporation, Quarterly
Report (Form 10-Q) (June 30, 2008) (reporting that 95% of Comcast Corporation’s consolidated revenue is derived
from its cable operations, which includes the provision of high-speed internet services) available at http://sec.gov/
15 18 U.S.C. 2511(3)(b)(ii).
16 See e.g., United States v. Friedman, 300 F.3d 111, 122-23 (2d Cir. 2002)(inmate use of prison phone);United States
v. Faulkner, 439 F.3d 1221, 1224 (10th Cir. 2006)(same); United States v. Hammond, 286 F.3d 189, 192 (4th Cir. 2002) st
(same); United States v. Footman, 215 F.3d 145, 154-55 (1 Cir. 2000) (same); Griggs-Ryan v. Smith, 904 F.2d 112, st
116-17 (1 Cir. 1990) (use of landlady’s phone); United States v. Rivera, 292 F. Supp. 2d 838, 843-45 (E.D. Va.
2003)(inmate use of prison phone monitored by private contractors). For a discussion of the consent exception to the
Wiretap Act as it is applied in other contexts, see, CRS Report 98-326, Privacy: An Overview of Federal Statutes
Governing Wiretapping and Electronic Eavesdropping, by Gina Marie Stevens and Charles Doyle.
Agreements for online advertising providers to monitor certain web traffic may be between the
online advertising provider and the website operators seeking to have ads placed on their sites.
The advertising providers receive information about user activity on participating websites and
aggregate that data to better target ads. In litigation against the online advertising provider
DoubleClick for violations of ECPA, the court examined whether websites were “users” of 17
electronic communications services under ECPA. ECPA defines a “user” as “any person or
entity who (A) uses an electronic communication service; and (B) is duly authorized by the 18
provider of such service to engage in such use.” The court reasoned that websites are “users”
(and, therefore, “parties to the communications” at issue) because they actively respond to
requests they receive over electronic communications services by deciding whether to send the
requested document, breaking the document down into TCP/IP protocol, and sending the packets 19
over the Internet. Because websites are “users” of electronic communications, the court found
that websites are also “parties to the communications” in dispute; therefore, website owners have 20
the ability to consent to a communication’s interception.
The court also held that the website operators had consented, by virtue of their contract with
DoubleClick, to allow the company to intercept certain traffic on their websites in order to target 21
advertising to website visitors. Consent for private interceptions of electronic communications
cannot be granted if the purpose of the interception is the commission of criminal or tortious 22
conduct. The court noted that the focus of the determination of criminal or tortious purpose
under ECPA is “not upon whether the interception itself violated another law; it is upon whether 23
the purpose for the interception—its intended use—was criminal or tortious.” Applying that
standard, the court found that the plaintiffs had not alleged that DoubleClick’s primary motivation
for intercepting communications was to injure plaintiffs tortiously. In the court’s view, even if
DoubleClick’s actions ultimately proved tortious or criminal, there was no evidence that
DoubleClick was motivated by tortious intent. As a result, the court found that the consent 24
exception to ECPA was satisfied.
In a similar suit against online advertising provider Pharmatrak, the court outlined limitations to
the consent exception regarding these types of agreements. In that case, Pharmatrak had
contracted with certain drug companies to provide advertising on their websites. Included in the
agreement was permission for the advertising provider to record certain web traffic that did not 25
include personally identifiable information. Perhaps inadvertently, the online advertising
provider did collect a small amount of personally identifiable information though it had pledged
17 In re DoubleClick, Inc. Privacy Litigation, 154 F.Supp. 2d 497 (S.D.N.Y. 2001).
18 18 U.S.C. §2510(13).
19 In re DoubleClick, Inc. Privacy Litigation, 154 F.Supp. 2d at 508-09.
20 Id. at 514.
21 Id. at 509-513.
22 18 U.S.C. §2511(2)(d).
23 In re DoubleClick, Inc. Privacy Litigation, 154 F.Supp. 2d at 516 (quoting Sussman v. ABC, 196 F.3d 1200, 1202
(9th Cir. 1999)).
24 Id. at 518-19.
25 In re Pharmatrk, Inc. Privacy Litigations, 329 F.3d 9 (1st Cir. 2003).
not to do so. The advertiser argued that consent had been granted for such interception. The court
disagreed. According to the court, it is for the party granting consent to define its scope, and the 26
parties in this case had not consented to the collection of personally identifiable information. In
collecting personally identifiable information by intercepting data without the consent of one of
the parties, the online advertiser potentially had violated ECPA, but may have lacked the requisite 27
intent to be found liable under the statute. The appeals court directed the trial court to conduct
further investigation into the matter.
Given the conclusions in the above cases, it appears that online advertising providers, like
DoubleClick, that partner to collect data from individual websites generally are not violating
ECPA, because the websites are “parties to the communication” with the ability to consent to
interception. Based on these cases, the advertising providers will not be seen as running afoul of
ECPA so long as the data the advertising providers collect do not fall outside the scope of the data
the advertising providers’ clients have agreed to disclose.
On the other hand, when the partnership is between the ISP and the online advertising provider,
neither of the parties to the agreement to intercept web traffic is a party to the communications
that are being intercepted. Therefore, it would appear that consent for the interceptions must be
obtained from individual customers of the ISPs. The questions, in these circumstances, are
whether consent must be “affirmative,” or if it can be “implied,” and if consent must be
“affirmative” what process must be used to obtain such consent from individual users.
Consent to interceptions has been implied by the surrounding circumstances of communications. 28
While consent may be implied, it may not be “casually inferred.” It seems unlikely, as a result,
that merely by using an ISP’s service, a customer of that service has implied her consent to the
interception of her electronic communications by online advertising providers. If consent likely
may not be implied simply from use of an ISP’s service, then a form of affirmative consent from
the ISP’s customer would be necessary.
In other statutes requiring consent for certain types of disclosure, regulatory regimes have 29
developed to define when and how affirmative consent should be obtained. A similar debate is
occurring now involving how ISPs should obtain consent from their customers to share data about
26 Id. at 20.
27 Id. at 23.
28 Williams v. Poulos, 11 F.3d 271, 281 (1st Cir. 1993)(finding that defendant corporation violated the Wiretap Act,
because it did not have implied consent or a business necessity to place wiretaps).
29 See e.g., In the Matter of Implementation of the Telecommunications Act of 1996; Telecommunications Carriers; Use
of Customer Proprietary Network Information and Other Customer Information; IP-Enabled Services, 22 FCC Rcd
6927 (2007)(outlining under what circumstances voice service providers must obtain “opt-in” v. “opt-out” consent in
order to disclose Customer Proprietary Network Information(CPNI)). For a discussion of the FCC’s CPNI disclosure
regulations, see CRS Report RL34409, Selected Laws Governing the Disclosure of Customer Phone Records by
Telecommunications Carriers, by Kathleen Ann Ruane.
their online activities with online advertising providers. The debate centers around whether ISPs
and advertisers must obtain “opt-in” consent or if they may continue to obtain “opt-out” consent
for these interceptions.
“Opt-in” consent is obtained when a party to the communication is notified that his or her ISP has
agreed to allow an online advertiser to track that person’s online activity in order to better target
advertising to that person. The advertiser, however, may not begin to track that individual’s web 30
activity until the individual responds to the notification granting permission for such activity. If
the individual never responds, interception can never begin. “Opt-out” consent, by contrast, is
obtained when a party to the communication is notified that his or her ISP has agreed to allow an
online advertiser to track that person’s online activity and the advertising provider will begin such
tracking unless the individual notifies the ISP or the advertiser that he or she does not grant 31
permission for such activity. If the individual never responds, interception will begin. Currently,
it appears that companies such as NebuAd are obtaining or planning to obtain “opt-out” consent 32
for the information gathering they engage in with ISPs. The present question is whether “opt-
out” consent is sufficient to satisfy the ECPA consent requirement. This question has yet to be
addressed by a federal court or clarified by legislation or regulation. However, as discussed
below, if Section 631 of the Communications Act applies to this type of data collection, “opt-in”
consent may already be required for cable companies acting as ISPs (though this may not be
required of telco companies such as Verizon or AT&T that operate as ISPs).
It is also possible that privacy provisions of the Communications Act apply to agreements 33
between cable operators acting as ISPs and online advertising providers. Section 631 of the
Communications Act provides basic privacy protections for personally identifiable information 34
gathered by cable operators. Specifically, cable operators must provide notice to subscribers,
informing them of the types of personally identifiable information the cable operator collects, 35
how it is disclosed, how long it is kept, etc. Cable operators are prohibited from collecting
personally identifiable information over the cable system without a subscriber’s prior written or 36
electronic consent. Cable operators are also forbidden to disclose personally identifiable
30 See The Network Advertising Initiative’s Self-Regulatory Code of Conduct for Online Behavioral Advertising,
Draft: For Public Comment, available at http://networkadvertising.org/networks/
NAI_Principles_2008_Draft_for_Public.pdf (last visited July 28, 2008). See also, 47 C.F.R. §2003(k)(defining “opt-in”
approval in the CPNI context).
31 See The Network Advertising Initiative’s Self-Regulatory Code of Conduct for Online Behavioral Advertising,
Draft: For Public Comment, available at http://networkadvertising.org/networks/
NAI_Principles_2008_Draft_for_Public.pdf (last visited July 28, 2008). See also, 47 C.F.R. §2003(l)(defining “opt-
out” approval in the CPNI context).
32 NebuAd Testimony at 4.
33 Testimony of Ms. Leslie Harris, CEO of the Center for Democracy and Technology, Privacy Implications of Online
Advertising: Hearing Before the S. Comm. On Commerce, Science, and Transportation, 110th Cong. (2008).
34 Codified at 47 U.S.C. §551. It is important to note that those providing DSL Internet service over phone lines, such
as Verizon or AT&T, would not be subject to the provisions of Section 631, because they are not cable operators.
Testimony of Ms. Gigi B. Sohn, President, Public Knowledge, Broadband Providers and Consumer Privacy: Hearing th
Before the S. Comm. On Commerce, Science, and Transportation, 110 Cong. (2008)(hereinafter Public Knowledge
Testimony), available at http://commerce.senate.gov/public/_files/SohnTestimony.pdf.
35 47 U.S.C. §551(a).
36 47 U.S.C. §551(b).
information without prior written or electronic consent of subscribers and must take action to
prevent unauthorized access to personally identifiable information by anyone other than the 37
subscriber or cable operator. NebuAd has argued that Section 631 does not apply to the 38
activities of cable operators when cable operators are acting as cable modem service providers.
Section 631 governs the protection of information about subscribers to “any cable service or other
service” provided by a cable operator. “Other service” is defined as “any wire or radio
communications service provided using any of the facilities of a cable operator that are used in 39
the provision of cable service.” In its order classifying cable modem services as “information
services,” the FCC stated the belief that “cable modem service would be included in the category 40
of ‘other service’ for the purposes of section 631.” Furthermore, in 1992, Congress added the
term “other services” to Section 631 as part of the Cable Television and Consumer Protection and 41
Competition Act. The House Conference Report on the law clarified that provisions redefining
the term “other services” were included in order “to ensure that new communications services 42
provided by cable operators are covered by the privacy protections” of Section 631.
Section 631 is judicially enforced, however, and it is for the courts to interpret the scope of its 43
application absent more specific guidance from Congress. It is unclear whether all of the
provisions of Section 631 encompass Internet services. “Other services” have been interpreted by 44
at least one district court to encompass Internet services. On the other hand, in 2006, the Sixth
Circuit Court of Appeals found that the plain language of Section 631(b) precluded its application 45
to broadband Internet service. Section 631(b) prohibits cable operators from using their cable 46
systems to collect personally identifiable information without the consent of subscribers. The
court based its decision that Internet services were not covered by this prohibition on its 47
interpretation of the definition of “cable systems.” The court found that the systems that deliver
Internet services are not the systems that Section 631(b) addresses, and therefore, cable operators
were not prohibited by Section 631(b) from collecting personally identifiable information over
systems that delivered Internet access services. The Supreme Court has yet to rule on this issue.
Even if Section 631(b) does not prevent cable operators from collecting personally identifiable
information over broadband Internet services, Section 631(c) may prohibit the disclosure of such
information to third parties regardless of whether the information was collected over the cable
37 47 U.S.C. §551(c).
38 Memorandum from NebuAd, Inc., Legal and Policy Issues Supporting NebuAd’s Services at 6.
39 47 U.S.C. Sec. §551(a)(2)(B).
40 In the Matter of Inquiry Concerning High-Speed Access to the Internet Over Cable and Other Facilities; Internet
Over Cable Declaratory Ruling; Appropriate Regulatory Treatment for Broadband Access to the Internet Over Cable
Facilities, 17 FCC Rcd at 4854, ¶ 112.
41 Cable Television and Consumer Protection and Competition Act, P.L. 102-385.
42 H.Rept. 102-862.
43 See 47 U.S.C. 551(f).
44 See Application of the United States of America for an Order Pursuant to 18 U.S.C. Sec. 2703(D), 157 F. Supp. 2d
286, 291 (SDNY 2001)(finding that the notice requirement for the disclosure of personally identifiable information
under 47 U.S.C. §551 included Internet services, except under 47 U.S.C. §551(h), which was exempt specifically from
the broad definition of “other services”).
45 Klimas v. Comcast Cable, Inc., 465 F.3d 271, 276 (6th Cir. 2006).
46 47 U.S.C. §551(b)(1).
47 Klimas, 465 F.3d at 276.
system.48 Section 631(c) of the Communications Act states that “a cable operator shall not
disclose personally identifiable information concerning any subscriber without the prior written
or electronic consent of the subscriber concerned and shall take such actions as are necessary to
prevent unauthorized access to such information by a person other than the subscriber or cable 49
operator.” If a cable operator, as an ISP, agrees to allow an online advertising provider to inspect
traffic over its cable system and to acquire some of that information, it seems that the cable
operator/ISP is disclosing information to the online advertising provider. Such disclosure would
apparently be a violation of the Communications Act if (1) the information disclosed is personally
identifiable information and (2) the cable operator/ISP is disclosing it without the prior written or
electronic consent of the subscribers to whom the information pertains.
Whether online advertising providers are gathering personally identifiable information in order to
provide their services is a matter of much debate. Section 631 does not define what personally
identifiable information is; it defines what personally identifiable information is not. According to
which does not identify particular persons.” Online advertising providers claim that they do not 51
collect any personally identifiable information. Public interest groups and other commentators
disagree, citing scenarios in which data which was not supposed to contain personally identifiable 52
information was used to identify individuals. Because Section 631 is judicially enforced, it is
likely that whether online advertisers are acquiring personally identifiable information as opposed
to aggregate data that do not identify particular persons will be a determination made by a federal
trial court. To date, there have been no cases addressing this question.
Assuming even that online advertising providers are gathering personally identifiable
information, cable operators are allowed to disclose personally identifiable information as long as
they obtain the prior written or electronic consent of the relevant subscribers, essentially an “opt-53
in” standard. In the event that online advertising companies are determined to be gathering
personally identifiable information and that Section 631(c) applies to cable operators in their
provision of cable modem services, cable operators would be required to obtain consent for such
disclosure under an “opt-in” regime.
48 47 U.S.C. §551(c)(1).
49 47 U.S.C. §551(c)(1). Cable operators, however, may collect such information without consent for the purposes of
obtaining information necessary to provide cable services or other services provided to the subscriber or to detect
unauthorized reception of cable communications. Cable operators may disclose personally identifiable information
without consent when it is necessary to render cable services or other services provided by the cable operator to the
subscriber, pursuant to a valid court order, and in other limited circumstances. 47 U.S.C. 551 (c)(2). These exemptions
do not appear to apply in this case.
50 47 U.S.C. §551(a)(2)(A).
51 See, e.g., NebuAd Testimony.
52 See, e.g., CDT Testimony.
53 47 U.S.C. §551(c).
The Federal Trade Commission (FTC) has held a number of hearings and town hall meetings to 54
examine the privacy issues raised by online behavioral advertising. The FTC continues to
advocate for industry self-regulation in this area, but has put forth a number of principles intended
to provide guidance. Some of the proposed principles include acquiring affirmative express
consent to use sensitive data for behavioral advertising, implementing reasonable security for data 55
collected, and limiting the time such data is retained. The FTC has also suggested that every
website where data are collected provide a “clear, concise, consumer-friendly, and prominent
statement that (1) data about consumers’ activities online is being collected at the site ... and (2) 56
consumers can choose whether or not to have their information collected....”
These principles were published on the FTC’s website in December of 2007. The FTC also
sought comments from the public on the principles. The comment period closed in April of 2008.
The comments received were posted on the FTC’s website in order to aid in the development of 57
self-regulatory programs. The FTC noted that, though the agency believed self-regulation
remained the best course of action, it did not foreclose the use of the FTC’s enforcement or
regulatory authority, including its authority to challenge unfair or deceptive trade practices.
The Network Advertising Initiative (NAI) is an industry group composed of online advertising
providers that has developed voluntary privacy, notice, and consent standards that are considered
to represent industry best practices for the protection of data gathered for the purposes of 58
behavioral advertising. These standards do not have the force of law, but a number of online
advertising providers have pledged to abide by them.
In December of 2008, the NAI released a new “Self-Regulatory Code of Conduct.”59 Under these
standards, members of the NAI must post clear and conspicuous notice on their websites
describing their data collection, transfer, and use practices. The Code instructs NAI members to
require the sites with which they contract for behavioral advertising to post conspicuous notice of,
among other things, the types of data collected by the company and how that data is used or
transferred to third parties. Members also must contractually require any third parties to whom
54 FTC Staff Proposes Online Behavioral Advertising Privacy Principles, http://www.ftc.gov/opa/2007/12/
principles.shtm (last visited October 1, 2008).
55 Online Behavioral Advertising, Moving the Discussion Forward to Possible Self-Regulatory Principles, released
December 20, 2007, available at http://www.ftc.gov/os/2007/12/P859900stmt.pdf (last visited September 23, 2008).
57 See FTC, # 228; Project No. P859900: Online Behavioral Advertising: Moving the Discussion Forward to Possible
Self-Regulatory Principles (2008), http://www.ftc.gov/os/comments/behavioraladprinciples/index.shtm.
58 Network Advertising Initiative, http://networkadvertising.org/index.asp.
59 The Network Advertising Initiative’s Self-Regulatory Code of Conduct, available at
http://www.networkadvertising.org/networks/2008%20NAI%20Principles_final%20for%20Website.pdf (last visited
January 13, 2009).
they provide personally identifiable information to comply with the Self-Regulatory Code of
The Self-Regulatory Code creates three tiers of information that may be collected for behavioral 60
advertising: non-personally identifiable information (Non-PII), personally identifiable 6162
information (PII), and Sensitive Consumer Information. The code requires “opt-out” consent
for the use of Non-PII. The prospective use of PII that is to be merged with Non-PII requires 63
“opt-out” consent accompanied by a “robust notice” that occurs prior to data collecion. The use
of PII that is to be merged with previously collected Non-PII requires “opt-in” consent. The use
of Sensitive Consumer Information always requires “opt-in” consent. Members must provide
reasonable security for the data that they collect, and they may only retain the data collected “as
long as necessary to fulfill a legitimate business need, or as required by law.” Behavioral
advertising that targets children under the age of thirteen (regardless of the type of information) is
Kathleen Ann Ruane
60 Non-PII is information that is not PII or Sensitive Consumer Information.
61 “PII includes name, address, telephone number, email address, financial account number, government-issued
identifier, and any other data used or intended to be used to identify contact or precisely locate a person.” The Network
Advertising Initiative’s Self-Regulatory Code of Conduct, Section II, available at http://www.networkadvertising.org/
networks/2008%20NAI%20Principles_final%20for%20Website.pdf (last visited January 13, 2009).
62 “Sensitive Consumer Information includes: Social Security Number or other Government-issued identifier; insurance
plan numbers, financial account numbers; information that describes the precise real-time geographic location of an
individual derived through location-based services such as through GPS-enabled services; precise information about
past, present, or potential future health or medical conditions or treatments, including genetic, genomic, and family
medical history.” It seems that some of the information included in the definition of PII is also included in the
definition for Sensitive Consumer Information. The Code of Conduct indicates that the definition of Sensitive
Consumer Information will be further developed in the coming implementation guidelines. The Network Advertising
Initiative’s Self-Regulatory Code of Conduct, Section II, available at http://www.networkadvertising.org/networks/
2008%20NAI%20Principles_final%20for%20Website.pdf (last visited January 13, 2009).
63 Robust Notice is defined by the Code of Conduct. “For the notice to be robust the consumer must be afforded clear
and conspicuous notice about the scope of any non-PII to be merged with PII, and how the merged data would be used
for [behavioral advertising]. Such notice must be provided immediately above or before the mechanism used to
authorize submission of any PII.” The Network Advertising Initiative’s Self-Regulatory Code of Conduct, Section II,
available at http://www.networkadvertising.org/networks/2008%20NAI%20Principles_final%20for%20Website.pdf
(last visited January 13, 2009).