New rules for Online Behavioural Advertising

Bulletin on new OBA rules - click to read PDFSince spring last year, websites and advertisers have been getting to grips with the new law on obtaining consent for cookies.

One common use of cookies is for online behavioural advertising (OBA), and from 4 February 2013 websites and advertisers using OBA will have additional rules to comply with.

The Advertising Standards Authority (ASA) is taking over responsibility for ensuring that consumers are made aware of, and can exercise choice over, the collection and use of information for OBA. The ASA’s first step is the introduction of new rules on OBA which will come into force from early February.

I have prepared an article summarising the key elements of the OBA Rules which websites and advertisers should be aware of. To read this article in full please click here (PDF).

Cookies: what’s happening out there?

Since the end of May, website users will have noticed a flurry of popups and banner messages inviting them to read (and in some cases agree to) information about how sites use cookies.

This has arisen as website owners finally get to grips with the new law on cookies and consent (see various previous posts), which requires websites to obtain consent from users before putting cookies on their computers of mobile devices.

Over the subsequent weeks, it seems a consensus has begun to emerge among websites as to how to inform users and obtain – or, more usually, infer – consent from users.

I wrote an article recently for the Guardian Media Network that gave some background to this. My firm has also just published a briefing note (PDF) which looks in more detail at how websites can show that users have consented to the use of cookies.

The briefing note refers readers to two essential guides for compliance: the Information Commissioner’s guidance (PDF) as issued at the end of May, and the International Chamber of Commerce’s guide (PDF) to the various types of cookie used by websites, and how to comply in respect of each.

The overall message, though, is: for most websites, especially those who avoid use of “targeting and advertising” cookies, compliance should be possible without having to infuriate your users with intrusive popups.

Data protection: out with the old, in with the new

The widely-trailed revision to EU data protection law has been unveiled today by the European Commission, who have proposed a “comprehensive reform” to EU data protection legislation.

The fundamental change is moving from national laws made under a harmonising directive, to a single regulation which will apply directly across Europe. While it’s going to take a little while to work through all the details – and the proposal still has to be discussed and ratified by EU member states and the European parliament – the key changes as summarised in the Commission’s press release are:

  • A single set of rules on data protection, valid across the EU.
  • Unnecessary administrative requirements, such as notification requirements for companies, will be removed. This will save businesses around €2.3 billion a year.
  • Instead of the current obligation of all companies to notify all data protection activities to data protection supervisors – a requirement that has led to unnecessary paperwork and costs businesses €130 million per year, the Regulation provides for increased responsibility and accountability for those processing personal data.
  • For example, companies and organisations must notify the national supervisory authority of serious data breaches as soon as possible (if feasible within 24 hours).
  • Organisations will only have to deal with a single national data protection authority in the EU country where they have their main establishment. Likewise, people can refer to the data protection authority in their country, even when their data is processed by a company based outside the EU.
  • Wherever consent is required for data to be processed, it is clarified that it has to be given explicitly, rather than assumed.
  • People will have easier access to their own data and be able to transfer personal data from one service provider to another more easily (right to data portability). This will improve competition among services.
  • A ‘right to be forgotten’ will help people better manage data protection risks online: people will be able to delete their data if there are no legitimate grounds for retaining it.
  • EU rules must apply if personal data is handled abroad by companies that are active in the EU market and offer their services to EU citizens.
  • Independent national data protection authorities will be strengthened so they can better enforce the EU rules at home. They will be empowered to fine companies that violate EU data protection rules. This can lead to penalties of up to €1 million or up to 2% of the global annual turnover of a company.

In addition, there will be a new directive to “apply general data protection principles and rules for police and judicial cooperation in criminal matters”.

The “right to be forgotten” has been the most widely-publicised measure under consideration, and will certainly raise some tricky practical issues. However, I suspect that the biggest practical impact will come from the requirement for explicit consent, where consent is required. At present, certainly under UK data protection law, a lot of reliance is placed on implied consent; see, for example, the Information Commissioner’s guidance on the new cookies law, as discussed in a previous post. Explicit consent will greatly increase the practical burden on many businesses.

The new law, if adopted, will come into force two years after it is adopted, giving businesses and other organisations time to prepare for the new regime.

Cookies: the rules become clearer

Businesses and other website operators looking for a belated new year’s resolution should take a look at the revised guidance on the use of cookies (PDF) issued by the Information Commissioner’s office just before Christmas and start thinking about how to comply.

Launching the guidance, the Information Commissioner said that businesses “must try harder” in preparing to comply with the new law, which came into force in May 2011 and will be fully enforced from the end of May 2012. More constructively, the revised guidance sets out some practical measures which websites can adopt to help ensure compliance with the new law.

The new law requires websites to obtain prior, informed consent from users before placing cookies on those users’ computers or mobile devices. As the new guidance puts it, before setting cookies you must:

  • tell people that the cookies are there,
  • explain what the cookies are doing, and
  • obtain their consent to store a cookie on their device.

The only exception is where the cookie is “strictly necessary” for technical reasons. The guidance confirms that this is a narrow exception, and will not (for example) cover cookies used for analytics or to tailor a greeting when a user returns to a site.

As a start point for compliance, the ICO guidance recommends a three-step approach:

  1. Check what type of cookies you use and how you use them.
  2. Assess how privacy-intrusive your use of cookies is.
  3. Decide how to obtain consent from users.

The more privacy-intrusive your use of cookies is, the more you will need to do in order to inform users and get their consent.

Providing information

The ICO recommends that cookie information should not simply be hidden behind a link saying “Privacy policy”. Instead, links should either read “Privacy and cookies”, say, or there should be a separate link for information on cookies. The guidance gives several examples of how to make this information more prominent.

Inferring consent

One very helpful suggestion made by the ICO is that consent to placing could be inferred if a user continues to use a website after being told of the use of cookies. This would involve some kind of pop-up notification when the user first visits the site, with a confirmation that a cookie has been set if the user then continues on to another page without clicking the “refuse cookies” link.

I suspect that this approach will prove highly popular with websites, given it avoids the problem experienced by websites that require positive consent such as ticking a box before placing cookies. One analysis suggested that only around 5% of users of the ICO’s website (which follows this tick-box approach) were agreeing to cookies – a figure which would have been ruinous for many websites.

However, inferring consent does still require a clear message to be displayed to first-time visitors. It is not enough to rely on a general “Privacy and cookies”-type link.

Opportunities for consent

The ICO guidance also suggests that websites look out for opportunities to obtain positive consent from users. One opportunity comes where new registered users are asked to agree to its terms and conditions as part of the sign-up process – though existing registered users will need to be told about any change to the terms to allow for cookies.

Other opportunities may come where users set preferences or use new features for the first time: for example, a notice saying “We will use a cookie to remember this”, with a link to the cookies policy.

Analytics cookies

Analytics cookies – often for Google Analytics – are one of the most widespread types of cookie. The ICO’s position on analytics cookies is that they are not technically essential for websites, so consent will be required for them.

The ICO recognises that in some cases it is not practical to obtain consent before setting analytics cookies, as these are often set the moment a user first visits the site. However, in that case information on the use of cookies must be highlighted clearly on the site.

Having said all that, the ICO does drop a large hint that it does not regard analytics cookies as posing a serious risk to privacy. In the very last paragraph of the 27-page guidance document, they state that “it is highly unlikely that priority would be given to focusing on uses of cookies where there is a low level of intrusiveness” – which includes “first party cookies used only for analytical purposes”, provided clear information is given on the site.

Third party and advertising cookies

Third party cookies, especially those used for online advertising, are the most problematic from a privacy point of view. The ICO’s research suggests that even well-informed internet users are unaware of the distinction between first party and third party cookies – that is, cookies used by someone other than the website owner.

Information on the use of third party cookies will need to be clearly set out as part of informing users and obtaining consent. Both the website owner and the third party will want to ensure that their respective obligations are clear: if you run an advertising-supported website, you will want to ensure that the advertising provider is obliged to provide accurate and complete information on their use of cookies (so that you can put this in your own cookies information); conversely, the advertising provider will want to ensure that participating websites are compliant with the law, as otherwise this will put the advertising provider themselves in breach.

The guidance acknowledges, though, that third party cookies remain “one of the most challenging areas in which to achieve compliance”, given the higher privacy concerns over such cookies and their critical importance to online advertising.

Conclusion

It remains to be seen how the new law will operate in practice. Levels of compliance remain woefully low, so it is hard to discern any “best practice” emerging at present. However, the ICO’s guidance does at last suggest some practical ways in which websites can comply with the law without losing the benefits of using cookies.

Cookies: the new regime

Back in March, I discussed the proposed changes to the law on cookies, to require prior, informed consent before most cookies are placed on users’ computers.

The new regulations have now been published by the UK government. Regulation 6 of the snappily-titled Privacy and Electronic Communications (EC Directive) (Amendment) Regulations 2011 amends the previous rules so that most cookies will now only be permitted if the website user:

  • is provided with clear and comprehensive information about the purposes of the storage of, or access to, that information; and
  • has given his or her consent.

In addition, however, the revised regulation also states that:

…consent may be signified by a subscriber who amends or sets controls on the internet browser which the subscriber uses or by using another application or programme to signify consent.

What does all this mean in practice? To help businesses understand what is required of them, the Information Commissioner’s Office has produced a guidance note on the new regulations (PDF). While this leaves a number of questions still unanswered (as we’ll see below), it does clarify a number of points that had been debated since the new law was first proposed last year.

1. Is your cookie “strictly necessary”?

The revised regulations retain the existing exceptions for cookies:

  • whose “sole purpose” is “carrying out the transmission of a communication over an electronic communications network”; or
  • which are “strictly necessary for the provision of an information society service requested by the subscriber or user”.

The second of these is the more important for most websites. It has been suggested that this could be interpreted quite widely, to include analytics cookies that track how people use the site: which pages they visit, how long they remain on the site, which search terms brought them there in the first place, and so on. The argument is that this enables sites to allocate resources as necessary to provide their services.

However, the guidance argues that the exception needs to be interpreted narrowly, and the cookie must relate to services “explicitly requested” by the user – not just the general functioning of the site. So a cookie to enable a shopping basket and checkout system to work would be fine. However:

The exception would not apply, for example, just because you have decided that your website is more attractive if you remember users’ preferences or if you decide to use a cookie to collect statistical information about the use of your website.

2. Can browser settings be used?

The reference to a website user “who amends or sets controls on [their] internet browser” has been read by some as allowing existing browser controls on cookies to be used to obtain consent. However, the ICO’s view is that:

most browser settings are not sophisticated enough to allow you to assume that the user has given their consent to allow your website to set a cookie.

In addition, people may be accessing using mobile devices that do not enable them to exercise even the crude levels of control (“cookies ON” / “cookies OFF”) found in current desktop browsers.

In the longer term, more sophisticated browser settings may be developed that enable websites to obtain consent in this way. However, for now it has to be assumed that some other means of obtaining consent is necessary.

3. How can we obtain consent?

The ICO’s guidance is not prescriptive, and discusses a number of ways in which websites can obtain consent.

One option is to use pop-ups as a means of informing users about your use of cookies and to obtain their consent, but the ICO recognises that this is “potentially frustrating” for users. Other means include:

  • Terms and conditions: sites that obtain users’ agreement to their terms and conditions (e.g. upon registering with the site or making a purchase) have a golden opportunity to obtain users’ consent. However, existing users should be made aware of the changes and asked to give their consent to the new terms.
  • Settings-led consent: where a cookie is necessary in order to enable a particular website feature, then users can be told at the point they enable that feature that a cookie will be used for this purpose.
  • Highlighted text: the website’s header or footer could include text that is highlighted when the site wishes to place a cookie, so that users can then agree to this.
  • Third-party cookies: these are widely used by advertising networks, and unfortunately the ICO guidance does little more than acknowledge that this “may be the most challenging area in which to achieve compliance with the new rules”. Clearly, though, finding techniques for describing the use of third-party cookies in such a way that users are inclined to agree to them will become something of an art form in the near future.

4. So what do I need to do?

While the new legislation comes into force on 26 May 2011, the ICO recognises that there will need to be a “phased approach” to enforcement, to give websites time to comply. The ICO’s key expectation at this stage is that organisations are at least giving serious thought to how to comply.

In particular, the guidance advises website owners to:

  1. Check what type of cookies and similar technologies you use and how you use them.
  2. Assess how intrusive your use of cookies is.
  3. Decide what solution to obtain consent will be best in your circumstances.

“The key point”, they add, “is that you cannot ignore these rules.”

Over the next few months I will revisit this issue to see how websites are going about achieving compliance in practice, and what technical measures are being developed to facilitate this.