DoubleClick Sued for Online Privacy Invasion

As consumer fears about privacy invasion threaten to stall the considerable growth of e-commerce, a lawsuit was filed in California Superior Court Thursday alleging that Internet advertising firm DoubleClick (Nasdaq: DCLK) has obtained and sold the personal information of online users.

The suit, filed on behalf of Harriet Judnick and the citizens of California, claims that the New York-based DoubleClick tracks Internet users and obtains personal and financial information such as name, age, address, and shopping patterns without their knowledge.

Additionally, the lawsuit contends that DoubleClick has previously stated that it does not collect personal information and that it strives to protect the privacy of Internet users.

DoubleClick has declined to respond publicly to the lawsuit.

DoubleClick Versus the Consumer

Many observers believe that “third-party” ad banner delivery companies like DoubleClick are among the most egregious of privacy offenders, because they seem to prefer corporate marketing interests over the interests of online consumers. Internet ad banner serving — while ubiquitous — is still largely unregulated and devoid of standards, resulting in a lack of consumer protection.

DoubleClick operates in a fiercely competitive industry, with competitors like 24/7 and others involved in a wave of corporate buyouts and consolidation. Ultimately, these efforts by DoubleClick to harvest user information could quite possibly be a desperate and ill-advised policy aimed at differentiating their services from those of their competitors.

Bad News for Consumers

At the heart of the matter is DoubleClick’s recent $1.7 billion (US$) acquisition of Abacus Direct Corp., a direct-marketing services company that maintains an extensive database to catalog the purchasing power of American households. Internet privacy advocates objected to the acquisition at the time, saying that it would create the opportunity for the exploitation of online users.

DoubleClick did acknowledge earlier this week that that it is forming alliances with Web sites to create a network that allows it to track users’ online data and shopping habits.

The company, which distributes advertisements on about 1,500 Internet sites, recently started linking tracking features called “cookies” to people’s names and addresses in an effort to compile data. It does allow users to “opt out” of providing personal information on its own Web site, but some critics say that dense language and difficult access make it possible for few users to ever navigate to the feature.

Seeking Injunction

Judnick’s lawsuit is asking for an injunction against DoubleClick that would require it to stop using its technology to collect personal data without prior consent of the user. It is also asking that the company be required to destroy all records that it has previously obtained without a user’s consent.

DoubleClick reported revenue of $98 million for the nine months ending in September, while it booked escalating losses of $17.9 million for the same period.