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A Productive Spring for the NAI Compliance Team

The Network Advertising Initiative (NAI) compliance team has had a productive spring, publishing the 2019 Annual Report, commencing the 2020 compliance review process, as well as working with members and the broader digital advertising industry to prepare for the enforcement of a number of new requirements, including just-in-time notice tied to the collection of Precise Location Information. 

The NAI recently released its 2019 Annual Report, the final review of members’ adherence to the 2018 NAI Code of Conduct, as well as a look back at recent publications and other NAI initiatives from the past year. The report demonstrates that member companies continued to improve their privacy disclosures and maintained the functionality of their consumer choice mechanisms. 

The report is based on findings from the 2019 compliance period in which 93 returning member companies, all leading third-party digital advertising companies, were reviewed during the year by NAI staff for compliance with the Code. Companies new to the NAI underwent an equally stringent review as part of their membership application process in 2019.

Overall, NAI members demonstrated that they treat consumer privacy as a priority, and collectively devoted thousands of hours to improving disclosures, maintaining consumer choice mechanisms, and meeting with NAI staff to further the industry’s collective understanding of best practices and requirements while ensuring that privacy is treated with equal importance by upstream and downstream partners. As in prior years, NAI staff found a variety of minor violations of the Code as a result of the organization’s robust year-round monitoring program. These included several links that did not appear to function correctly, and disclosures that could have benefitted from additional information regarding data collection and use in specific circumstances. NAI staff worked with members to resolve such issues as quickly as possible, minimizing the potential impact on consumers, and preventing problems from growing into more material violations.

The biggest challenge in 2019 was the industry’s collective compliance with NAI requirements for notice and choice tied to the collection and use of data on connected televisions. This was the first year that NAI members were required to comply with these obligations, and the fact that tailored advertising on connected televisions is still in its nascency has led to confusion about how and when requirements may apply, which was compounded by the lack of an established framework for consumer choice. These problems are similar to what the industry experienced as mobile technologies gained widespread adoption, and those issues were resolved over time thanks to the efforts of the digital advertising industry. NAI staff published a compliance warning to members in October, and devoted considerable time in 2019 to member education with regard to notice and choice tied to connected televisions and expects to see dramatically improved compliance in 2020.

The report also provided an update on the NAI’s achievements over the course of the prior year, such as the publication of the NAI’s 2020 Code of Conduct, several new guidance documents, and much more robust public policy outreach and policymaker education tied to state and federal legislation.

Before the ink dries on the 2019 Annual Report, the NAI has already commenced its 2020 compliance review process. NAI staff is nearly finished reviewing the first group of members, those who joined the NAI last year, and will shortly be moving on to returning member companies. This year, in addition to a heavy focus on connected television requirements, as mentioned above, the NAI is conducting its first annual review based on the 2020 Code of Conduct, which greatly expands the scope of the NAI’s self-regulatory program and introduces a number of new requirements with regard to offline data, Sensitive Information, Precise Location Information, political advertising, and many other topics.

At the outset of the year, when the broader 2020 Code went into effect, the NAI was forced to delay enforcement of two new requirements: just-in-time notice for the collection of Precise Location Information, and a global cross-device Opt-Out Mechanism for Audience Matched Advertising. At the time, the NAI intended to begin enforcement of these provisions on July 1, as part of this year’s compliance review. Both of these requirements involve extensive changes to and development of the digital advertising infrastructure, so additional time was necessary to bring them to fruition. While the NAI and its members have devoted extensive time and effort to developing the requisite background technologies necessary for compliance with these requirements, this year’s public health crisis and resulting limitations on resources have made it impossible to meet the planned timeline, and the NAI now plans to begin enforcement of these two provisions on January 1, 2021.

In the meantime, NAI staff is continuing its education and compliance efforts, helping member companies to provide better disclosures and more thorough consumer choice mechanisms, while continuing to advocate for federal privacy legislation and developing new guidance and best practices in novel issues for digital advertising.