A leading expert on computer surveillance has raised serious doubts over the legality of deals by BT, Virgin Media and Carphone Warehouse to sell their customers' web browsing data to Phorm, a new online advertising company.
Professor Peter Sommer, the author of the groundbreaking 1980s book The Hacker's Handbook and a frequent expert witness in data crime trials, said the plan to monitor the contents of the websites people visit in order to target advertising could fall foul of the Regulation of Investigatory Powers Act 2000 (RIPA).
Commenting on BT network diagrams that describe the system, obtained by The Register, Professor Sommer said: "Whatever the parties involved say, this appears to be an interception under RIPA. The real issue will be about how consent is obtained."
Phorm's system works by reading the contents of web pages you visit, to build up a profile of your interests on your computer. It then uses this information to target you with appropriate categories of advertising when you later visit a website that is a member of the Open Internet Exchange (OIX), its publisher and advertiser network. Phorm has announced that The Guardian, Financial Times and MySpace have all signed up to let it serve the targeted ads to their users.
RIPA states: "For the purposes of this Act, but subject to the following provisions of this section, a person intercepts a communication in the course of its transmission by means of a telecommunication system if he... monitors transmissions made by means of the system."
RIPA goes on to allow for interception without a warrant - i.e. by Phorm and your ISP rather than law enforcement agencies - "if the communication is one sent by, or intended for, a person who has consented to the interception". The full text of the Act is available here.
The problem for BT, Virgin Media, and Carphone Warehouse is that most people are uncomfortable with the idea that all their browsing will be spied upon. Indeed, people are unlikely to give their consent when presented with all the facts, such as Phorm's roots in spyware.
BT disputes this however: "Detailed customer research by BT has shown that once customers are aware of the benefits of Webwise, they are overwhelmingly in favour of the free security features and more relevant advertising during web browsing," it told The Register last week.
Phorm's ad targeting system will be marketed as "Webwise", with heavy emphasis placed on a sideline in anti-phishing warnings that are near-identical to those already available in both Firefox and Internet Explorer. BT's FAQ on Webwise makes it clear that subscribers will be opted in by default. "I didn't switch on this service. Why do I have to switch it off?," one question asks.
The response states: "We believe BT Webwise is an important improvement to your online experience - giving you better protection against online fraud and giving you more relevant advertising. We realise that you may not want to use the free service, so we've made it quick and easy to switch on and off."
It's not clear yet if "switching off" Webwise will stop traffic being intercepted, or whether people will just avoid seeing targeted ads on OIX sites. "Once you have opted out, the opt out cookie prevents any of your browsing from being collected," BT's FAQ equivocates (our emphasis).
We have asked Phorm about this point, but it is yet to get back to us.
Virgin Media told us today: "Virgin Media is still some way from deploying Webwise. We will roll-out the system once we are completely satisfied that our implementation meets all applicable privacy guidelines and complies with all data protection requirements."
Potential violation of RIPA through an unlawful interception is a separate issue to requirements under the Data Protection Act, however.
Phorm has attempted to head off privacy pitfalls by commissioning and publishing an Ernst and Young privacy audit (PDF). The accountants found its ad targeting system passed privacy standards because it does not store data. A profile of interests is built up on your computer, rather than Phorm's.
Several independent sources indicate unease within BT over its plans to hand customer data over to Phorm. The switch-on is scheduled for the fourth quarter of this year, but BT security and legal professionals scrutinising the deal have raised concerns, including over RIPA and also the effect it may have on ISPs' claims that they are "mere conduits" for data. That line is currently being used in negotiations with rights holders over how to deal with illegal filesharing.
"The lawyers were obviously dubious, but the marketing men just saw the pound signs," one well-placed person told us. The ISPs have watched jealously as Google and others have built enormous advertising businesses.
Another BT man commented anonymously on our last Phorm story, to say the firm is telling worried staff via its intranet: "People have wildly different feelings about this. Actually, if used properly it can be a huge advantage for the customer. Others like you feel different.
"We will monitor this carefully and see what the experience in practice will be and evaluate seriously." ®