ScanScout Tricked Consumers Who Wanted to Block Ads, FTC Charges

It wasn't exactly caught with its hand in the cookie jar but ScanScout has nevertheless agreed to stop misleading consumers who try to reduce online ads by blocking cookies on their computers.

The Federal Trade Commission (FTC)  charged that it deceptively claimed that consumers could opt out of receiving targeted ads by changing their computer’s web browser settings to block cookies.

In fact, ScanScout used Flash cookies, which browser settings could not block. The proposed settlement bars misrepresentations about the company’s data-collection practices and consumers’ ability to control collection of their data.

It also requires that ScanScout take steps to improve disclosure of their data collection practices and to provide a user-friendly mechanism that allows consumers to opt out of being tracked.

ScanScout is an advertising network that places video ads on websites for advertisers. ScanScout engages in behavioral advertising – it collects information about consumers’ online activities and then serves video ads targeted to their interests.

According to the FTC complaint, from at least April 2007 to December 2010, ScanScout’s website privacy policy discussed how it used cookies to track users’ behavior. The privacy policy stated,“You can opt out of receiving a cookie by changing your browser settings to prevent the receipt of cookies.” 

However, changing browser settings did not remove or block the Flash cookies used by ScanScout, the FTC charged. The claims by ScanScout were deceptive and violated the FTC Act, the complaint alleged.

The proposed settlement will bar ScanScout from misrepresenting the extent to which consumers’ data is collected, used, shared, or disclosed. Within 30 days after the settlement order becomes effective, ScanScout must place a prominent notice on its home page stating, “We collect information about your activities on certain websites to send you targeted ads. To opt out of our targeted advertisements, click here.” 

The hyperlink must take consumers to a mechanism that allows them to prevent the company from collecting information that can identify them or their computer; redirecting their browser to third parties that collect data without their approval; and associating any previously collected data with them. The consumer’s choice must last for at least five years, unless the consumer changes it.