program areas Digital Consumer

  • So-called “native advertising” ─where advertiser-produced or –directed content is designed to blend in with online editorial information ─ is quickly becoming a dominant way American consumers receive marketing. Marketers in the U.S. spent nearly $8 billion last year on native ads (up $3 billion from 2013), which is expected to rise to $21 billion by2018.1 Native ads are where the “format and the tone match that of a publisher’s original editorial content.2 1 (link is external)‐native‐ads‐will-soar-as-publishers‐and‐ 2 “The Native-Advertising Report: Spending Trends, Format Breakdowns, and Audience Attitudes.” Mark Hoelzel, BI Intellengence. 6 Nov. 2014, personal copy.
    Jeff Chester
  • CDD's executive director Jeff Chester called on regulators representing dozens of nations to address the role that today's data collection complex plays in consumer transactions and services. Speaking at the 2015 annual meeting of the International Consumer Protection and Enforcement Network (ICPEN), Chester said that in order to protect consumes today's regulatory agencies--such as the FTC--must understand how data issues are integrally a part of consumer services, including in the financial, health, and retail marketplace. A modified version of the presentation is attached, minus the videos shown that illustrated the cross-device tracking and Big Data Management Platforms that are just the latest developments in digital targeting of individuals. There were also video presentations on how programmatic advertising works (targeting junk food to kids); the role that measurement plays (continually analyzing how we respond to a range of applications and interactions); and the growing use of neuromarketing (fMRI's, facial coding, etc.) is shaping digital marketing and other communications so that it operates at the subconscious and emotional level of individuals. The "story" the slides tell is that to protect consumers in the 21st Century, consumer regulatory agencies need to address how digital marketing actually operates, which is, of course, through a system that integrates data collection with a range of online advertising applications (to "immerse" users in the interactive content, through social media surveillance, neuromarketing, geo-location, etc.). Consumer agencies should tackle the "path-to-purchase" paradigm, supported by Google and others, that continually targets an individual to influence their purchasing behaviors both online and offline. Digital marketing is really a powerful system designed to promote the influence of brands and products, including through ways designed to change how an individual thinks, feels and acts. We explained that this was a global system, with the same set of marketing and data gathering practices being used in SE Asia, Middle East, Latin America, EU, U.S., etc. So here's a quick run-down of the slides attached, minus the videos. Slide 1: 21st Century Consumer protection must address the role that data collecting and its use play with the marketing and provision of services, including financial and health. Slide 2: Scholars, such as Prof. Frank Pasquale, are raising concerns about the role that complex data analysis plays in decision-making on individuals. They have called for regulators to address how the "Black Box" of algorithms and related predictive analytic tools is used in the marketplace. Slide 3: This slide from Adobe illustrates one of my points, that the “Black Box” reflects deliberately chosen business practices used to target individuals. The so-called “secret sauce” is often visible by examining how the businesses use their data and marketing to sell or promote to consumers. Slide 4: What safeguards are required today. Slide 5: Our work since the early 1990’s to address the role that data plays in the commercial marketplace, including our leading campaign to enact the Children’s Online Privacy Protection Act (COPPA) in 1998. We explained we fought for privacy rules that would protect everyone back in the 1990’s, but the industry opposition then—as today—was too strong to get anything except for children. Slide 6: Explained that the basic business model for online was articulated back in the early 1990’s in the book “One-to-One Future.” At that time, it was about tracking an individual across a single website; today includes omnipresent tracking across devices and applications. The picture on the right is Facebook’s new data center in Sweden, the largest one it has built in the EU. Slide 7: Illustrates the role that online data collection, through lead generation, played in the global financial crisis. Online lead gen used to sell subprime loans in the U.S. Message was there are vast international consequences—to people, families, and nations—with how the online marketing system operates. Slide 8: Our recent FTC complaint on Google’s YouTube Kids unfair and deceptive ad practices that target the youngest children. Slide 9: It’s a global system and an international problem. Slide 10: What’s been created in a commercial surveillance system of individuals, groups, and communities. Slide 11: The path-to-purchase paradigm and need for regulators to understand and address the continual monitoring and targeting of consumers. Slide 12: The role that contemporary “Big Data” practices play in marketing. Slide 13: The mobile device’s critical role in digital marketing, including how quickly it achieved mass use (compared with other media). Slide 14: The complex of data companies, often working closely together, that assembles profiles of an individual. Slide 15: It’s not anonymous. It’s about an individual. Slide 16: To address today’s consumer practices, you need to analyze how both data and digital marketing applications are used. Slide 17: The intent is to understand and “manage” a person’s identity, for commercial (and also political) purposes. Slide 18: Facebook sells itself to advertisers by saying they know the “identity” of the user. Slides: 19-20: A person is sold in real-time, milliseconds, to marketers via so-called programmatic buying (ad exchanges, etc.). Gave example from McDonald’s in Denmark. Slides: 21-23. Features of contemporary digital marketing. Slides 24-25: Companies are engaged in social media surveillance, including through the monitoring and analysis of blogs, posts, etc. They are now social media “command centers” engaging in such practices 24/7. Slides 26-28: Examples of digital marketing of loans to low-income consumers, health products and alcoholic beverages. Slide 29: Real-time data targeting and sells of a user/household coming to TV. Slide 30: Teens require safeguards. Role of junk food companies using digital marketing, despite global youth obesity epidemic. Slide 31: Problems will grow, with Internet of Things, mobile payments, wearable’s, etc. Final Slide: Need to proactively act. Regulators should be concerned that trade deals, such as TPP and TTIP, will restrict their ability to act on the future. PS: FTC Commissioner Julie Brill gave a terrific presentation on these issues, raising many key concerns (attached).
  • U.S. PIRG Education Fund and the Center for Digital Democracy (CDD) respectfully submit these additional comments to the Federal Trade Commission (FTC). A set of regulatory and other safeguards is urgently required to ensure that contemporary “Big Data”-driven financial services are used in an equitable, transparent, and responsible manner. All Americans, especially those who confront daily challenges to their economic security, should be assured that their lives will be enhanced—not undermined—by the new digital-data financial services marketplace. A closer critical examination of the commercial information infrastructure in the U.S. reveals a set of well-developed and interconnected data collection and use practices that few consumers are aware of—let alone have consented to. While the commission’s September 2014 workshop explored some of the key issues, it did not sufficiently examine the implications of current “Big Data” business practices. U.S. PIRG Education Fund and CDD urge the commission to issue a final report that addresses the issues we identify [see attached file].
  • The Federal Trade Commission has issued a powerful and disturbing privacy wake-up call. The report reveals the largely invisible Big Data-driven complex that regularly spies on every American, comprehensively following our activities both online and off. It delivers a critical “black eye” to the data-broker industry, which has cynically expanded its surveillance on Americans without regard to their privacy. Unlike the White House’s Big Data reports issued earlier this month, the FTC study provides a much more realistic—and chilling—analysis of an out-of-control digital data collection industry. However, the commission’s calls for greater transparency and consumer control are insufficient. The real problem is that data brokers—including Google and Facebook—have embraced a business model designed to collect and use everything about us and our friends—24/7. Legislation is required to help stem the tide of business practices purposefully designed to make a mockery of the idea of privacy for Americans.******Here are the key findings from the FTC report that illustrate how the data industry requires major reform:VIII. FINDINGS AND RECOMMENDATIONS This report reflects the information provided in response to the Orders issued to nine data brokers, information gathered through follow-up communications and interviews, and information gathered through publicly available sources. Based primarily on these materials about a cross-section of data brokers, the Commission makes the following findings and recommendations: A. Findings 1. Characteristics of the Industry ⊲⊲ Data Brokers Collect Consumer Data from Numerous Sources, Largely Without Consumers’ Knowledge: Data brokers collect data from commercial, government, and other publicly available sources. Data collected could include bankruptcy information, voting registration, consumer purchase data, web browsing activities, warranty registrations, and other details of consumers’ everyday interactions. Data brokers do not obtain this data directly from consumers, and consumers are thus largely unaware that data brokers are collecting and using this information. While each data broker source may provide only a few data elements about a consumer’s activities, data brokers can put all of these data elements together to form a more detailed composite of the consumer’s life. ⊲⊲ The Data Broker Industry is Complex, with Multiple Layers of Data Brokers Providing Data to Each Other: Data brokers provide data not only to end-users, but also to other data brokers. The nine data brokers studied obtain most of their data from other data brokers rather than directly from an original source. Some of those data brokers may in turn have obtained the information from other data brokers. Seven of the nine data brokers in the Commission’s study provide data to each other. Accordingly, it would be virtually impossible for a consumer to determine how a data broker obtained his or her data; the consumer would have to retrace the path of data through a series of data brokers. ⊲⊲ Data Brokers Collect and Store Billions of Data Elements Covering Nearly Every U.S. Consumer: Data brokers collect and store a vast amount of data on almost every U.S. household and commercial transaction. Of the nine data brokers, one data broker’s database has information on 1.4 billion consumer transactions and over 700 billion aggregated data elements; another data broker’s database covers one trillion dollars in consumer transactions; and yet another data broker adds three billion new records each month to its databases. Most importantly, data brokers hold a vast array of information on individual consumers. For example, one of the nine data brokers has 3000 data segments for nearly every U.S. consumer. ⊲⊲ Data Brokers Combine and Analyze Data About Consumers to Make Inferences About Them, Including Potentially Sensitive Inferences: Data brokers infer consumer interests from the data that they collect. They use those interests, along with other information, to place consumers in categories. Some categories may seem innocuous such as “Dog Owner,” “Winter Activity Enthusiast,” or “Mail Order Responder.” Potentially sensitive categories include those that primarily focus on ethnicity and income levels, such as “Urban Scramble” and “Mobile Mixers,” both of which include a high concentration of Latinos and African Americans with low incomes. Other potentially sensitive categories highlight a consumer’s age such as “Rural Everlasting,” which includes single men and women over the age of 66 with “low educational attainment and low net worths,” while “Married Sophisticates” includes thirty-something couples in the “upper-middle class . . . with no children.” Yet other potentially sensitive categories highlight certain health-related topics or conditions, such as “Expectant Parent,” “Diabetes Interest,” and “Cholesterol Focus.” ⊲⊲ Data Brokers Combine Online and Offline Data to Market to Consumers Online: Data brokers rely on websites with registration features and cookies to find consumers online and target Internet advertisements to them based on their offline activities. Once a data broker locates a consumer online and places a cookie on the consumer’s browser, the data broker’s client can advertise to that consumer across the Internet for as long as the cookie stays on the consumer’s browser. Consumers may not be aware that data brokers are providing companies with products to allow them to advertise to consumers online based on their offline activities. Some data brokers are using similar technology to serve targeted advertisements to consumers on mobile devices.
  • Groups File Report with the White House “Big Data” Review Proceeding Washington, DC: U.S. PIRG Education Fund and the Center for Digital Democracy (CDD) released a comprehensive new report today focused on the realities of the new financial marketplace and the threats and opportunities its use poses to financial inclusion. The report examines the impact of digital technology, especially the unprecedented analytical and real-time actionable powers of “Big Data,” on consumer welfare. The groups immediately filed the report with the White House Big Data review headed by John Podesta, who serves as senior counselor to the President. The White House is to issue a report in April addressing the impact of “Big Data” practices on the public, including the possible need for additional consumer safeguards. In addition to the undeniable convenience of online and mobile banking, explains the report, the new financial environment poses a number of challenges, especially for lower-income consumers. Increasingly, the public confronts an invisible “e-scoring” system that may limit their access to credit and other financial services. “We are being placed under a powerful ‘Big Data’ lens, through which, without meaningful transparency or control, decisions about our financial futures are being decided,” the report explains. “Will big data tools be used to help banks and other financial firms offer lower-cost products that help the unbanked and underbanked join the insured financial system and build assets, or will big data simply make it easier for payday lenders and others seeking to extract money from consumers to win?” asked U.S. PIRG Education Fund Consumer Program Director Ed Mierzwinski. “We intend the report to stimulate a healthy debate among policymakers, industry and consumer and civil rights leaders.” Among the issues examined in the report, “Big Data Means Big Opportunities and Big Challenges: Promoting Financial Inclusion and Consumer Protection in the ‘Big Data’ Financial Era,” are the following:the plight of “underbanked and unbanked consumers,” who face special challenges in the new financial marketplace;the impact of data collection and targeted advertising on all Americans, most of whom have no idea that their personal data shape the offers they receive and the prices they pay online;the use of murky “lead generation” practices, especially by payday lenders and for-profit trade schools, to target veterans and others for high-priced financial and educational products; andthe need for new regulatory oversight to protect consumers from potentially discriminatory and deceptive practices online.The report, co-authored by Ed Mierzwinski, Consumer Program Director of the U.S. PIRG Education Fund, and CDD Executive Director Jeff Chester, reflects on the role that online financial marketing played in the recent economic crisis, and provides a blueprint for how such problems can be avoided in the future. “Technological advances that collect, analyze, and make actionable consumer data,” the report concludes, “are now at the core of contemporary marketing. The public is largely unaware of these changes and there are few safeguards in this new marketplace. Economically vulnerable consumers, and especially youth, will be continually urged to spend their limited resources. Conversely, there are opportunities to use the same tools to urge consumers to budget, save and build assets.” “Consumers increasingly face a far-reaching system that uses data about them to predict and determine the products and services they are offered in the marketplace. Federal safeguards that protect privacy and ensure members of the public are not subject to unfair and discriminatory financial practices are long overdue,” explained CDD’s Jeff Chester. “The White House ‘Big Data’ report should call for strong measures to ensure that the changing financial services marketplace operates in a fair and equitable manner.” A copy of the new report is available at and (link is external) The Center for Digital Democracy is a nonprofit group working to educate the public about the impact of digital marketing on financial services, public health, consumer protection, and privacy. It has played a leading role at the FTC and in Congress to help promote the development of legal safeguards against behavioral targeting and other potentially invasive online data collection practices. U.S. PIRG Education Fund works to protect consumers and promote good government. We investigate problems, craft solutions, educate the public and offer Americans meaningful opportunities for civic participation.
  • Project

    Big Data Means Big Opportunities and Big Challenges

    Promoting Financial Inclusion and Consumer Protection in the “Big Data” Financial Era

    Dramatic changes are transforming the U.S. financial marketplace. Far-reaching capabilities of “Big-Data” processing that gather, analyze, predict, and make instantaneous decisions about an individual; technological innovation spurring new and competitive financial products; the rapid adoption of the mobile phone as the principal online device; and advances in e-commerce and marketing that change the way we shop and buy, are creating a new landscape that holds both potential promise and risks for economically vulnerable Americans. Using advances in data analytics specifically to promote economic inclusion and fairness during this period of transformation in the U.S. economy should be a proactive strategy embraced by all stakeholders. While not a panacea to address growing financial inequality, a wise investment in strategies that harvest the potential of the new digital financial system may better enable struggling Americans to maneuver a difficult economic future. This work is licensed under a Creative Commons Attribution 4.0 International License (link is external)
  • excerpt via Exchangewire (link is external): Privacy awareness body Truste has today (28 January) released its annual Consumer Confidence Index, revealing 60% of participants in the survey were more concerned about their online privacy compared to 12 months ago, with 89% actively “avoiding” companies they don’t believe protect their privacy adequately....However, it seems that contagion has spread to the private sector too, as there are three times as many survey participants concerned about companies sharing their personal information with other companies (60%), than governments’ monitoring activity (20%)....Ken Parnham, Truste managing director, Europe, commenting that the online advertising sector can only suffer over such widespread negative public sentiment.He says: “After a barrage of media headlines about government surveillance programmes such as NSA’s PRISM, it is perhaps unsurprising that consumer online trust has fallen to its lowest point yet, with only 55% of internet users prepared to trust companies with personal data online.“It is a wake-up call for businesses that commercial data collection and sharing, rather than government activity, is the main driver of increased online privacy concerns.”In fact the use of personal data for the purposes of targeting online advertising ranked as the second-biggest concern among the survey participants, with 54% of respondents reporting it as a major concern, while 19% were concerned about companies tracking their location on a smartphone.
  • Today, the United States Trade Representatives convenes two days of hearings (see attached agenda) to help it formulate a negotiating policy for the forthcoming EU/U.S. trade pact--known as the Transatalantic Trade and Investment Partnership (TTIP). CDD is one of the consumer groups that has been asked to brief its Policy Staff Committee.A number of U.S. industry groups, including the "Digital Trade Coalition" (Sidley & Austin) and the Coaltion for Privacy & Free Trade (Hogan Lovells)--in what illustrates how healthy fiction writing is at some law firms--paint a picture of a robust system protecting privacy here (we've attached their comments to USTR as well because they are worth reviewing to illustrate what the online data lobby agenda is). These coalitions want the U.S. to seek a trade deal that would allow our ineffective privacy regime to be considered "interoperable" with the EU's human rights and civil liberties robust approach. As we will explain later today, the U.S. is just at the very beginning in its efforts to protect consumer privacy in the digital era--hampered by many of the very forces these business coalitions represent. A number of U.S. online data companies, for example, are even unwilling to support even a modest Do Not Track standard, or stronger rules to protect youth, let alone serious privacy legislation.Consumer and privacy groups which are also members of the Transatantlic Consumer Dialogue will also speak on the TTIP, including on its impact on health, food safety, IP and other issues.
  • Blog

    CDD Presentation at World Health Org on Digital Alcohol Marketing

    We will present this Wed. at the WHO's Global Alcohol Policy conference. Our presentation is: The Digital Marketing of Alcoholic Beverages to Youth: How Social Media, Mobile Devices, Personalized Data Collection and Neuromarketing have transformed the global advertising landscape.

    Here's the abstract.Powerful new digital marketing techniques permit beer and alcohol companies to deeply penetrate into the hearts and minds of consumers, and their social networks of friends. The growing sophistication and capabilities of online marketing, increasingly integrated into the lifestyles of youthful and Internet connected consumers throughout the world, pose potential public health concerns—as well as opportunities. Marketing today has been transformed from the viewing of a single advert on television or in print, into experiencing interactive and highly personalized content that influences what we consume and purchase. Alcoholic beverage companies are winning global awards for their campaigns, including those launched in the Asia Pacific, EU, North and South America markets.Today, a single user can be stealthily tracked and profiled throughout their “online journey”—including their visits to many websites and they actions they take--as their information is collected and analyzed. Then so-called online “behavioral” advertising takes this profile data to target an individual user more precisely.. Mobile phone and location marketing permit marketers to “geo-target” users in specific geographic areas and at defined times. Digital advertising can operate across so-called multiple platforms—following a single consumer whether they are in front of the personal computer, using a mobile device, or even soon while watching television. Super-fast computers are able to identify a single individual who might be a suitable target for an online alcohol ad—and sell them in real-time to the highest bidder.Facebook and other social media enable marketers to go beyond the targeting of individuals to also influence and “activate” ones network of friends. The goal for much of social media marketing is to encourage consumers to do the marketing for the brand, through new forms of viral and other “peer-to-peer” endorsements. Millions of Facebook members are now regularly reached by alcoholic beverage companies.Online marketers are increasingly relying on the use of “neuromarketing” to create ads and other content expressly designed to penetrate the subconscious minds of users. Through the use of “immersive” online content, including entertainment, digital marketers are creating new forms of story-telling designed to increase brand loyalty and sales.