Ad industry launches new self-regulatory regime for online tracking

The online advertising industry is trying to ward off tighter privacy regulations with a feature that helps Internet users spot when they are being tracked.

Under the self-regulatory program announced on Monday, companies will place an icon next to advertisements that track users. The icon will link to a disclosure statement about online tracking and give consumers the chance to opt out of being followed. 

The controversial tracking ads allow companies to collect data about a person’s Web-browsing habits in order to tailor paid content to their interests. Critics say the practice is dangerous because consumers have no idea how much information they are giving away. 

The effort at self-regulation come as the Federal Trade Commission (FTC) prepares to announce new online privacy proposals in the coming weeks. The FTC is expected to recommend ways for consumers to gain more control over their online data. The agency held a series of roundtable discussions last year to inform its findings. 

Meanwhile, in the House, lawmakers are considering two online privacy bills that would mandate companies give consumers more information about how they are being tracked. Reps. Rick Boucher (D-Va.) and Bobby Rush (D-Ill.) have each drafted bills. 

The attempt at self-regulation is being led by a collection of the largest ad industry trade associations, including the Direct Marketing Association, the American Association of Advertising Agencies and the American Advertising Federation. In 2011, the Council of Better Business Bureaus will begin monitoring and enforcing compliance with the practice. 

“The advertising industry has a long history of strong, effective … self regulation of traditional media, and we look forward to applying these lessons to the dynamic new online advertising market," Lee Peeler, president of the National Advertising Review Council, said in a statement. 

Privacy advocates say self-regulation is not enough to rein in online tracking practices. 

They point to prior instances where the ad industry has promised self-regulation without following through and say government involvement is needed to curb the practice.

This post was updated at 1:43 p.m.