WASHINGTON - DoubleClick (DCLK), a leading Internet advertising firm, revealed that the Federal Trade Commission has launched an informal inquiry into its business practices.
DoubleClick has come under fire in recent weeks over its "Abacus Online" service. That service combines Web surfers' electronic data, such as Internet protocol (IP) addresses, with offline data such as names, postal addresses, and catalog purchase histories culled from the files of Abacus Direct, an offline marketing firm DoubleClick bought last year.
In a Monday filing with the Securities and Exchange Commission, DoubleClick also acknowledged that it is the target of several class-action suits alleging the company unlawfully obtains and sells Internet users' personal information.
"We are fully cooperating and we applaud the FTC's efforts to keep the Internet safe for consumers," said DoubleClick CEO Kevin O'Connor.
In a statement issued Wednesday, DoubleClick also revealed that it is the subject of another informal government inquiry, by the New York state attorney general's office. New York has been in the forefront of state efforts to guard consumer online privacy. However, a spokeswoman for the attorney general declined to comment on that investigation.
The FTC bent its own no-comment rule on such matters by issuing a noncommittal statement.
"The Federal Trade Commission staff is conducting a routine inquiry of DoubleClick to determine whether it has engaged in unfair and deceptive practices in violation of section five of the Federal Trade Commission Act," said Jodie Bernstein, the director of the FTC's Bureau of Consumer Protection. "The company has been cooperating in the inquiry."
DoubleClick's shares fell almost five points in Wednesday's trading, to 106.50, before the Nasdaq exchange suspended trading at 1:05 p.m. Eastern time. In after-hours trading on Island ECN, DoubleClick was off 9.94 to 96.5 on 636,000 shares.
Also on Monday, DoubleClick rolled out a new public relations campaign aimed at damage control of the storm of criticism raining down on the company. DoubleClick announced a public education effort by way of full-page ads in national newspapers, and the creation of a new "chief privacy officer" post at the company, among other measures. The company's president, Kevin Ryan, said Monday that DoubleClick had created as many as 100,000 profiles on individual Web surfers using a combination of online and offline data.
DoubleClick says it will only do business with Web sites with posted privacy policies. But the company declines to specify just how those policies should be worded. It also refuses to name which of its clients have signed up for Abacus Online so far.
The company's efforts are decried as too little, too late by privacy advocates, who argue that consumers have a right to explicit notice and affirmative choice before being swept up in DoubleClick's dragnet.
Last week, the Electronic Privacy Information Center (EPIC) filed a formal complaint with the FTC, asking it to investigate DoubleClick for possible "unfair and deceptive business practices." DoubleClick responded by calling EPIC's complaint "meritless." But EPIC might have the last laugh.
"It appears they've reconsidered their position," said Marc Rotenberg, EPIC's executive director.
