House targets behavior-based Web ads

House lawmakers on Tuesday released an early draft of a bill to regulate how and when websites may target their advertisements based on their users’ shopping habits or browsing behaviors.

As part of that legislation, spearheaded by Reps. Rick Boucher (D-Va.) and Cliff Stearns (R-Fla.), websites would have to disclose how they collect and with whom they share users’ information online.

The bill also would grant Web consumers the right to altogether opt out of any website’s so-called behavior-based advertising practices.

“Our legislation confers privacy rights on individuals, informing them of the personal information that is collected and shared about them and giving them greater control over the collection, use and sharing of that information,” said Boucher, the chairman of the House Energy and Commerce subcommittee that handles Internet issues.

Boucher and Stearns’ latest effort arrives at the behest of a growing number of public-interest groups, which petitioned the Federal Trade Commission this year to examine whether behavior-based advertising undermines users’ privacy.

Some of those groups have long claimed that websites frequently share sensitive information with business partners, often with no regard for their consumers. Others fret countless businesses do not yet offer users the chance to opt out of targeted advertisements.

The lawmakers’ legislation would address both concerns by requiring websites to specify how they are using a Web user’s information and where it is being shared. Sites that failed to disclose those details, or those who improperly handle data they collect, would consequently face punishment by the FTC, according to the bill.

Consumers could also choose to opt out of behavior-based advertising altogether. Additionally, websites would “need an individual’s express opt-in consent to knowingly collect sensitive information about an individual, including information that relates to an individual’s medical records, financial accounts, Social Security number, sexual orientation, government-issued identifiers and precise geographic location information,” according to a summary of the draft legislation.

Following the bill’s release on Tuesday, Stearns promised to work with Boucher to “enact meaningful privacy protection legislation.”

“While I may not support everything in the current draft bill, it is important to get the input of stakeholders,” he said, noting that Boucher’s draft does advance the debate. “I look forward to working with Chairman Boucher to improve upon his hard work.”

It remains unclear if the congressman’s bill will address those stakeholders’ concerns.

Amid speculation Boucher would present an opt-out ad system, a handful of public-interest groups decried the congressman’s effort as too weak. Many of those organizations plan to present their objections during a conference call later Tuesday afternoon.

Some business groups, meanwhile, also expressed days before Boucher released his bill that a heavy-handed federal effort to regulate the Web ad industry would stifle innovation. 

But one group on Tuesday, the Network Advertising Initiative, said it would review the bill before forming a position. 

“NAI members have been very much focused on getting out as a matter of self-regulation tools that improve transparency and choice. We feel that tremendous progress has been made, and that’s going to be an important part of whatever legislative dialogue occurs,” said Charles Curran, executive director of NAI, which boasts members like Google and Yahoo.