2011-29792. ScanScout, Inc.; Analysis of Proposed Consent Order To Aid Public Comment

AGENCY:

Federal Trade Commission.

ACTION:

Proposed Consent Agreement.

SUMMARY:

The consent agreement in this matter settles alleged violations of federal law prohibiting unfair or deceptive acts or practices or unfair methods of competition. The attached Analysis to Aid Public Comment describes both the allegations in the draft complaint and the terms of the consent order—embodied in the consent agreement—that would settle these allegations.

DATES:

Comments must be received on or before December 8, 2011.

ADDRESSES:

Interested parties may file a comment online or on paper, by following the instructions in the Request for Comment part of the SUPPLEMENTARY INFORMATION section below. Write “ScanScout, File No. 102 3185” on your comment, and file your comment online at https://ftcpublic.commentworks.com/​ftc/​scanscoutconsent,, by following the instructions on the Web-based form. If you prefer to file your comment on paper, mail or deliver your comment to the following address: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:

Kandi Parsons ([phone]), FTC, Bureau of Competition, 600 Pennsylvania Avenue NW., Washington, DC 20580.

SUPPLEMENTARY INFORMATION:

Pursuant to section 6(f) of the Federal Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46(f), and § 2.34 the Commission Rules of Practice, 16 CFR 2.34, notice is hereby given that the above-captioned consent agreement containing a consent order to cease and desist, having been filed with and accepted, subject to final approval, by the Commission, has been placed on the public record for a period of thirty (30) days. The following Analysis to Aid Public Comment describes the terms of the consent agreement, and the allegations in the complaint. An electronic copy of the full text of the consent agreement package can be obtained from the FTC Home Page (for November 8, 2011), on the World Wide Web, at http://www.ftc.gov/​os/​actions.shtm. A paper copy can be obtained from the FTC Public Reference Room, Room 130-H, 600 Pennsylvania Avenue NW., Washington, DC 20580, either in person or by calling [phone].

You can file a comment online or on paper. For the Commission to consider your comment, we must receive it on or before December 8, 2011. Write “ScanScout, File No. 102 3185” on your comment. Your comment—including your name and your state—will be placed on the public record of this proceeding, including, to the extent practicable, on the public Commission Web site, at http://www.ftc.gov/​os/​publiccomments.shtm. As a matter of discretion, the Commission tries to remove individuals' home contact information from comments before placing them on the Commission Web site.

Because your comment will be made public, you are solely responsible for making sure that your comment does not include any sensitive personal information, like anyone's Social Security number, date of birth, driver's license number or other state identification number or foreign country equivalent, passport number, financial account number, or credit or debit card number. You are also solely responsible for making sure that your comment does not include any sensitive health information, like medical records or other individually identifiable health information. In addition, do not include any “[t]rade secret or any commercial or financial information which is obtained from any person and which is privileged or confidential,” as provided in Section 6(f) of the FTC Act, 15 U.S.C. 46(f), and FTC Rule 4.10(a)(2), 16 CFR 4.10(a)(2). In particular, do not include competitively sensitive information such as costs, sales statistics, inventories, formulas, patterns, devices, manufacturing processes, or customer names.

If you want the Commission to give your comment confidential treatment, you must file it in paper form, with a request for confidential treatment, and you have to follow the procedure explained in FTC Rule 4.9(c), 16 CFR 4.9(c).^[1] Your comment will be kept confidential only if the FTC General Counsel, in his or her sole discretion, grants your request in accordance with the law and the public interest.

Postal mail addressed to the Commission is subject to delay due to heightened security screening. As a result, we encourage you to submit your comments online. To make sure that the Commission considers your online comment, you must file it at https://ftcpublic.commentworks.com/​ftc/​scanscoutconsent by following the instructions on the web-based form. If this Notice appears at http://www.regulations.gov/​#!home,, you also may file a comment through that Web site.

If you file your comment on paper, write “ScanScout, File No. 102 3185” on your comment and on the envelope, and mail or deliver it to the following address: Federal Trade Commission, Office of the Secretary, Room H-113 (Annex D), 600 Pennsylvania Avenue NW., Washington, DC 20580. If possible, submit your paper comment to the Commission by courier or overnight service.

Visit the Commission Web site at http://www.ftc.gov to read this Notice and the news release describing it. The FTC Act and other laws that the Commission administers permit the collection of public comments to consider and use in this proceeding as appropriate. The Commission will consider all timely and responsive public comments that it receives on or before December 8, 2011. You can find more information, including routine uses permitted by the Privacy Act, in the Commission's privacy policy, at http://www.ftc.gov/​ftc/​privacy.htm.

Analysis of Agreement Containing Consent Order To Aid Public Comment

The Federal Trade Commission has accepted, subject to final approval, a consent agreement from ScanScout, Inc. (“ScanScout”).

The proposed consent order has been placed on the public record for thirty (30) days for receipt of comments by interested persons. Comments received during this period will become part of the public record. After thirty (30) days, the Commission will again review the agreement and the comments received, and will decide whether it should withdraw from the agreement and take appropriate action or make final the agreement's proposed order.

ScanScout is a video advertising network that engages in online behavioral advertising, the practice of collecting and storing information about consumers' online activities across Web sites in order to deliver advertising targeted to their interests as inferred from their online activities. ScanScout acts as an intermediary between Web site publishers and advertisers that wish to have their video advertisements placed on Web sites. As a general matter, when a consumer visits a Web site within an online behavioral advertiser's network of Web site publishers, the online advertising network sets an HTTP cookie, which is a small text file, into the consumer's browser or automatically receives a cookie it has previously set in the consumer's browser. The cookie contains a unique identifier that allows the network to recognize the consumer's computer and correlate the computer to online activity across Web sites. The advertising network uses the cookie to collect and store information about the consumer's online activities, including content or advertisements viewed and the pages visited within a particular Web site.

By contrast, from at least April 2007 to September 2009, ScanScout used Flash cookies, also known as Flash local shared objects, instead of HTTP cookies to conduct online behavioral advertising. ScanScout's privacy policy stated that by changing their browser settings, consumers could opt out of receiving cookies; however, at that time, users could not use their browser settings to block the placement of Flash cookies. Accordingly, the complaint alleges that ScanScout deceived consumers and violated Section 5 of the FTC Act by stating that consumers could prevent the company from collecting data about their online activities by changing their browser settings to prevent the receipt of cookies. The Commission alleges that representations ScanScout made in its privacy policy regarding consumers' ability to opt out of receiving cookies were false or misleading.

Part I of the proposed order prohibits ScanScout ^[2] from misrepresenting (1) the extent to which data about users or their online activities is collected, used, disclosed, or shared and (2) the extent to which users may exercise control over the collection, use, disclosure, or sharing of data collected from or about them, their computers or devices or their online activities. Part II of the proposed order requires the company to take a number of steps to improve the transparency of, and users' ability to control, its collection of user data for online behavioral advertising. First, within thirty (30) days after service of the proposed order, ScanScout must place a clear and prominent notice with a hyperlink on the homepage of its Web site that states: “We collect information about your activities on certain Web sites to send you targeted ads. To opt out of our targeted advertisements, click here.” The notice must direct users to a mechanism that allows them to prevent the company from (1) collecting information that can be associated with them or contains a unique identifier, (2) redirecting their browsers to third parties that collect data, absent an affirmative action, and (3) associating any previously collected data with them. Such choice must remain in effect for a minimum of five (5) years. ScanScout may, however, collect data that can be associated with a particular user or that contains a unique identifier for certain permissible uses specified in the order—for example, to effectuate the consumer's opt out choice or to limit the number of times an advertisement is displayed.

Second, within close proximity to the mechanism, the company must disclose: (1) That it collects information about users' activities on certain Web sites to deliver targeted ads; (2) that by opting out, the company will not collect this information to deliver such ads; (3) users' current choice status (i.e., whether opted out or not opted out); and (4) any circumstances that, if initiated by the user, would disable the mechanism or require the user to implement the mechanism again to maintain his or her choice (i.e., if they switch browsers or devices, or if they delete cookies, they will have to opt out again).

Third, within or immediately adjacent to any behaviorally targeted display advertisement that the company serves, it must include a hyperlink that takes users directly to the required choice mechanism. The hyperlink text must disclose to consumers that selecting the hyperlink will give them choices about receiving targeted ads.

Fourth, due to technical limitations ScanScout cannot currently incorporate a hyperlink to the choice mechanism into all its video advertisements; therefore the order requires the company to undertake reasonable efforts to develop and implement a hyperlink for video advertisements that directs users to the choice mechanism, and the company must report regularly to the Commission regarding those efforts.

Parts III through VII of the proposed order are reporting and compliance provisions. Part III requires ScanScout to retain documents relating to its compliance with the order. Part IV requires dissemination of the order to all current and future principals, officers, directors, managers, employees, agents, and representatives having supervisory responsibilities relating to the subject matter of the order. Part V ensures notification to the FTC of changes in corporate status. Part VI mandates that ScanScout submit reports to the Commission detailing its compliance with the order. Part VII provides that the order expires after twenty (20) years, with certain exceptions.

The purpose of the analysis is to aid public comment on the proposed order. It is not intended to constitute an official interpretation of the proposed order or to modify its terms in any way.

By direction of the Commission.

Donald S. Clark,

Secretary.

Footnotes

1.  In particular, the written request for confidential treatment that accompanies the comment must include the factual and legal basis for the request, and must identify the specific portions of the comment to be withheld from the public record. See FTC Rule 4.9(c), 16 CFR 4.9(c).

2.  In November 2010, ScanScout merged with Tremor Media, Inc., now known as Tremor Video, Inc. Tremor Video, Inc. is included in the definition of respondent in the order. In addition, the order includes a representation by ScanScout that any parents, subsidiaries, and successors necessary to effectuate the relief contemplated by the order are bound to the order as if they had signed the agreement and were made parties to the proceeding.