Opt-Out Cookie Error Earns Chitika A Whopping 55 Cents And An FTC Inquiry

Search-targeted advertising network Chitika  reached a settlement this week with the Federal Trade Commission over illegally tracking consumers behavior online. According to the FTC, Chitika allowed users to opt out of having cookies placed on their browsers and receiving targeted ads, but unfortunately, Chitika’s opt-out only lasted 10 days. After this period, Chitika continued to track these consumers’ behavior on the web even though they opted out. This took place from at least May 2008 through February 2010, says the FTC. Chitika says this was an unintentional error in their tracking systems.

How much was it worth to Chikita to flaunt the privacy rules? Not much. Chitika tells us that it earned an estimated $0.55 from the users who requested to opt out but were tracked starting ten days after their request instead of ten years. Basically, their claim is that this was totally accidental and not a way to create more revenue (illegally) for the network. Chitika’s cookies track search history and sites visited but the network says no personally identifiable information is collected – the cookies contain no information on a user’s name, age, gender, etc.

The FTC settlement not only bars Chitika from obviously doing this again, but also requires that every targeted ad include a hyperlink that takes consumers to a clear opt-out mechanism that allows a consumer to opt out for at least five years.

The FTC also mandated that Chitika destroy all identifiable user information collected when the defective opt out was in place. In addition, the settlement requires that Chitika alert consumers who previously tried to opt out that their attempt was not effective, and they should opt out again to avoid targeted ads.

Chitika says that since March 1st, 2010, Chitika’s opt-out cookies have been set to last for ten years, which is twice the length required by FTC regulations. While the ad network didn’t profit from the error, the fact is that they broke a law by illegally tracking consumer behavior without their consent. And Chitika seems remorseful enough: “Obviously, it would be incredibly stupid of us to intentionally break the rules of online privacy over a million dollars, much less fifty-five cents,” says Chitika CEO Venkat Kolluri.

But the FTC has been broadly cracking down on ad networks and web sites that track consumer behavior without consent, most recently calling for a “Do Not Track” system for websites. Perhaps Chitika only deserved a slap on the wrist, instead of a public flogging.