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An Update on NAI Compliance

While the NAI’s work on compliance remains ongoing for 2011, we wanted to provide an update on the results of the NAI review initiated following a July blog posting by a researcher at Stanford’s Center for Internet and Society (CIS).  The posting concerned the use of a history-sniffing script by Epic Marketplace, an NAI member company.

The NAI’s review has confirmed that Epic Marketplace, through a legacy advertising system acquired from Traffic Marketplace, deployed a history-sniffing script over at least a two-year period prior to last July. On browsers that allowed it, the script used browsing history to assign interest segments for advertising targeting, and also to verify the quality of data provided by third-party data providers. The review found that where users had opted out of online behavioral advertising by the company, data gathered through the history-sniffing script was not stored or used. The company did not adequately disclose its use of the script to consumers, or to the NAI in the course of its annual compliance reviews.

Epic Marketplace’s use of a history-sniffing script, and failure to fully disclose this practice to consumers and during its compliance reviews, was inconsistent with the NAI Code and NAI policy. In response to the NAI’s review, in which the company cooperated, Epic has ceased its use of the script, deleted all data obtained using the script, and acknowledged that its conduct did not meet self-regulatory standards. However, the NAI believes that beyond these remedial steps, further measures are necessary. Accordingly, the NAI is requiring that for the next three years, Epic undergo annual audits performed by an independent third party to help ensure that the technologies it uses for advertising purposes provide users an appropriate degree of transparency and control under the NAI Code; that history sniffing is not occurring and that no history sniffing data is being collected, stored, or used by Epic’s systems; and that Epic otherwise is continuing to comply with NAI requirements. NAI staff will be provided access to the results of all such audits. If any audit reveals evidence of non-compliance with these requirements and NAI Code or policy, Epic’s NAI membership may be suspended or revoked. Epic has agreed to fully cooperate with these audits, which will be separate from any audits or reviews it has previously commissioned.

We want to emphasize the seriousness with which the NAI takes allegations of violation of its standards. Although online advertising practices have a high degree of transparency, technological monitoring – whether by self-regulatory bodies or by independent researchers – provides a vital tool for verifying compliance. While the NAI is already using technical monitoring to evaluate more than 60 companies as part of this year’s annual review, we also believe that newly developed tools (similar to those employed by CIS researchers) could be used to further strengthen our review process. In the coming months, we will be exploring new options for our technical monitoring toolbox, evaluating technologies developed by independent researchers and other providers in the self-regulatory space. We believe that enhanced technical monitoring, combined with the current annual review process that focuses on our members’ existing and emerging business practices, will help ensure that users are provided transparency and choice in a manner consistent with the NAI’s principles.

-NAI Staff