Can One Lawsuit Kill Behavioral Ads?

A lawsuit filed against NebuAd may cause the death of online behavioral advertising, or in the very least, provide a cautionary tale to ISPs.

NebuAd made an ugly splash earlier this year when the Senate started asking questions about its behavioral advertising techniques. Without informing the customers of several ISPs, NebuAd had installed software that tracked online behavior and delivered advertisements tailored to perceived customer interest.

Questions from the Senate and a scathing declaration from the House of Representatives freaked out a few ISPs, and big names like Charter Communications dropped from NebuAd’s client list. Now a class action lawsuit against NebuAd and participating ISPs on behalf of thousands of angry customers will likely shut NebuAd down and provide a wake-up call to those concerned with Internet privacy.

The lawsuit claims NebuAd violated federal and state privacy laws, including anti-wiretapping statutes, by watching customers without notification or explanation. “Like a vacuum cleaner, everything passing through the pipe of the consumers’ Internet connection was sucked up, copied and forwarded,” the lawsuit states.

NebuAd is playing quiet at the moment. The company’s only blurb was, “We are reviewing the complaint, which we intend to defend against vigorously.” NebuAd declined further comment.

Paired with a vow from major ISPs earlier this year to cease the practice of behavioral advertising, this lawsuit should set a precedent against such nefarious behavior. Companies engaging in similar practices should learn from NebuAd’s example and eventual fate.