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    Update: NebuAd Settles Lawsuit Over Behavioral Targeting Tests

    Three years ago, there was considerable debate and controversy over Charter Communications and NebuAd’s plans to use deep packet inspection to build profiles on individual users in order to better target behavioral advertising toward those individuals. (Whenever you send an e-mail or visit a Web site, your data is broken up to packets of information and directed toward the destination requested. Deep packet inspection allows the Internet Service Provider to read the contents of an e-mail or figure out what Web site a customer is visiting.)

    I previously blogged about these secret surveillance programs and privacy and civil liberty questions that surround them. In the U.S., Charter Communications, CenturyTel Inc., WOW!, Broadstripe, and Metro Provider have all used such controversial systems to track customers, according to a recent report (pdf) by Free Press and Public Knowledge. Lawsuits were filed concerning the deep packet inspection’s privacy and civil liberty questions, and now MediaPost reports that NebuAd has settled one lawsuit:

    Defunct ad company NebuAd has agreed to a $2.4 million settlement of a class-action privacy lawsuit stemming from tests of its controversial behavioral targeting technology.

    Two-thirds of the settlement will go toward various privacy organizations, while seven Web users who brought suit will receive between $1,000 and $5,000 each, according to papers filed Tuesday in federal court in the Northern District of California. The lawyers representing the consumers will receive up to $800,000 in attorneys’ fees. […]

    Lawsuits are still pending against four ISPs that partnered with NebuAd: Bresnan, Cable One, Embarq and Wide Open West. A case against a fifth ISP, Knology, was sent to arbitration, while a lawsuit against CenturyTel was dismissed in June.

    NebuAd partnered with ISPs to gather data about Web users’ activity and then determine which ads to serve them based on their searches or the sites they visited. The technology was more controversial than older forms of behavioral targeting because ISPs could provide data about everything consumers did online, including their searches and activity at non-commercial sites. […]

    NebuAd’s emergence sparked congressional hearings in 2008 about online privacy. Faced with pressure from lawmakers, ISPs suspended plans to work with the company. NebuAd folded in 2008.

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