March 18, 2008

Dispute Over Legality Of ‘Phorm’ Ad Targeting System

Britain's Foundation for Information Policy Research (FIPR) has argued in an open letter that the online advertising system Phorm is illegal, claiming it violates the Regulation of Investigatory Powers Act 2000 (RIPA) that protects users from unlawful interception of information.

However, both Phorm and BT have said the technology is not in violation of any UK laws.  And indeed many companies, such as BT, Talk Talk and Virgin, have signed on to use Phorm, which targets advertisements to users based on their web habits.

The system works by "trawling" websites visited by users and then matches keywords from a page's content to a profile.   Users who visit websites that have signed up to Phorm's technology are then targeted with tailored ads.

The debate on Phorm's use, legal or otherwise, is ultimately based upon the interpretation of RIPA.

In its letter to the Information Commissioner Richard Thomas, FIPR argued that Phorm must seek the consent of both web users and website operators.

Nicholas Bohm, FIPR's general counsel, told BBC News, "The need for both parties to consent to interception in order for it to be lawful is an extremely basic principle within the legislation, and it cannot be lightly ignored or treated as a technicality."

FIPR's treasurer, Richard Clayton, said, "The Phorm system is highly intrusive; it's like the Post Office opening all my letters to see what I'm interested in, merely so that I can be sent a better class of junk mail.

"Not surprisingly, when you look closely, this activity turns out to be illegal.

"We hope that the Information Commissioner will take careful note of our analysis when he expresses his opinion upon the scheme."

But companies such as BT see things differently.  A BT spokesman told BBC News, "Provided the customer has consented, we consider that there will generally be an implied consent from website owners.

"Secure and password-protection content will not be scanned, profiled or stored."

Phorm CEO Kent Ertugru said the company was "very, very comfortable" that the firm was not breaching any laws.

"With regards to a website that is published openly and fairly, we are not breaching any laws in using information that is published on it," he said.

He added that websites that discouraged web crawling from search engines would not be subject to Phorm's tools.

"We are willing for our view to be tested in law," said Mr Ertugrul.

In its letter, FIPR emphasized that many websites require registration and allow their content to be available only to specific people.  It claims these websites, or certain pages within them, were part of the "unconnected web" and that their existence was only made known to a small number of trusted people.

Phorm has argued that its system increases user privacy because as it allows users to opt out of the technology.

"Phorm has an on-off switch and does not store any personal data at all," said Mr Ertugrul.


On the Net:

Foundation for Information Policy Research (FIPR)

Regulation of Investigatory Powers Act 2000


BT webwise


Fipr open letter to Information Commissioner