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NAI Announces Updated Code of Conduct

Authored by Emma M. Lustigman, Summer Intern

The Network Advertising Initiative recently announced its revised 2020 Code of Conduct, which notably extends the ban on interest-based advertising for those under 16 years old.  While compliance is voluntary, given contractual obligations, the ban impacts a wide array of marketers. 

Background

The NAI is an industry trade group founded in 2000 comprising third-party digital advertising companies.  The NAI is the leading self-regulatory association dedicated to responsible data collection and its use for digital advertising.  The non-profit states that its mission is to “promote the health of the online ecosystem by maintaining and enforcing high standards for data collection and use for advertising online and in mobile” as well as “educating and empowering consumers to make meaningful choices about their experience with online advertising through an easy-to-use opt-out mechanism”.  More about the NAI and its mission can be found here.

“The NAI’s Code of Conduct is a set of self-regulatory principles that requires NAI member companies to provide notice and choice with respect to Interest-Based Advertising (IBA), Cross-App Advertising (CAA) and Retargeting (collectively, Personalized Advertising) as well as Ad Delivery and Reporting (ADR) activities.” The Code, first published in 2000, was created to cover web-based data collection and use; the Code was significantly updated in 2008, 2013, 2015 and 2018, and in 2013 the Mobile Application Code was added.  The Code requires members to notify individuals who use websites, mobile apps, and electronic devices about data collection obtained electronically and used for advertising purposes.  The organization broadly requires members to allow consumers to opt out of the use of their “non-sensitive” data for tailored advertising – but does not force companies to stop collecting that data for ad delivery and reporting purposes. More about the Code of Conduct can be found here.

The NAI announced further revised the Code on May 14, 2019.  Leigh Freund, President and CEO of the NAI stated, “The 2020 NAI Code expands the scope of coverage to modern digital advertising practices by formally including the use of offline data and advertiser customer database information to target ads across websites, applications, and television screens.”

Key Updates

The Code revisions include provisions that change already existing requirements and add various new requirements.  The provisions include an expanded scope of Tailored Advertising and expanded use of Precise Location Information that takes into account data collection from sensors in devices, including microphones, cameras and biometric sensors.

The 2020 code will require NAI members to provide the political audience targeting segments they use for digital advertising.  The NAI also made several updates around the use of PII (or personally-identified information) for tailored advertising.  This requires PII-based opt-out on the NAI’s and members’ sites and allow consumers to be able to choose whether they want NAI member companies to use their PII for Tailored Advertising, which comports with the California Consumer Privacy Act.  For a summary of the updated Code click here.  The revised Code mandates that members obtain consumers’ opt-in consent before collecting sensitive information, such as health information and precise location data for ad targeting and reporting. 

The addition to the Code that has received the most attention is the change in age restrictions for Tailored Advertising.  Behavioral Advertising, which is also known as Tailored Advertising or “Interest-Based Advertising”, is a technique used by online advertisers to present targeted ads to consumers.  This process uses data collected across multiple websites that a consumer visits (e.g., webpages visited, amount of time spent on a page, click activities, times of visits, and interaction with the site) to push to the consumer advertisements targeted directly to that consumer’s interests. The recent update in the Code changes the minimum age for which NAI members may knowingly target audiences from 13 to 16 years old.  This change is significant particularly given that Children’s Online Privacy Protection Act of 1998 only applies to those under 13 years old.

The updated NAI Code of Conduct will be effective on January 1, 2020.

Take Away: Marketers who are bound by the NAI’s Code and whose advertising is directed at teenagers need to reexamine their practices to be sure that under-16 ad targeting is eliminated.  In addition, those marketers need to examine their data collection practices to be sure that appropriate opt-ins from all consumers are obtained for sensitive data, and that enhanced opt-outs are also in place by January 1, 2020.

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