Internet companies that use behavioural and targeted advertising must become more transparent, or risk the Office of Fair Trading stepping in to regulate the market.
Having examined the targeted and behavioural ad sector since October, the watchdog said that the current system of self-regulation was only meeting "some" concerns.
It found that, although the ads were helpful to them in some circumstances, "more could be done to provide consumers with better information about how personal information is collected and used."
To this end, industry body the Internet Advertising Bureau will be expected to work with behavioural ad sellers to ensure they provide "clear" notices and explanations to consumers.
Details about opting out should also be clear on the adverts to help ease users' concerns, which "centre around privacy issues and the possibility for the misuse of personal data."
The OFT added: "Should industry action prove ineffective, the OFT and the Information Commissioner's Office are strengthening the effectiveness of regulation".
Such a tightening of the advertisers' code will come about by the seeking an agreement "to establish in which circumstances the ICO, or the OFT, would take enforcement action."
However about four out of ten consumers polled by the OFT said behavioural ads made no difference, and 24 per cent welcomed it, partly for providing more relevant content.
About 30 per cent disagreed, saying they disliked the practice of a cookie or other system tracking their browsing habits, with 1 per cent saying it was so unwelcome it would make them stop using the internet altogether.
May 27, 2010
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