Lawsuit Looms as Internet Providers use Controversial Marketing Technology

Dennis Faas's picture

Several Internet Service Providers (ISPs), along with "NebuAd," the company responsible for a controversial marketing technology that delivers "more relevant ads" while you surf the Internet are facing a class action lawsuit.

The suit was filed in the U.S. District Court in San Francisco and alleges violations of the Electronic Communications Privacy Act, Computer Fraud and Abuse Act, California's Invasion of Privacy Act and California's Computer Crime Law, as well as aiding and abetting, civil conspiracy and unjust enrichment.

Earlier this year, NebuAd made the news when it partnered with Charter Communications to test its Deep Packet Inspection (DPI) technology. Users were automatically opted into the tests but were given the option of opting out if and when they learned about the trial. Charter Communications dropped the program due to angry reactions from their users. (Source:

The suit notes that NebuAd and the ISPs acted both independently and jointly to access and disclose information about the ISP subscribers that was sensitive and personally identifying and that the intentional interception of the information was done without the consent of the subscriber. (Source:

The suit also notes that the process was not in the normal course of business for the ISP and was used instead to monetize the subscriber's data for advertisement purposes and that ISPs are allowed to track subscriber traffic to monitor for things like viruses, spam and the overall health of their networks but that DPI is not part of those rights. A 51 page copy of the lawsuit document is available from DocStoc. (Source:

The suit goes on to further note that the Acceptable Use Policies (AUP) used did not include language informing them that their online communications could be sold to advertisers and that DPI allows ISPs to tap into new revenue streams aside from the traditional subscription business model.

The lawsuit does not involve corporations that affiliated with NebuAd, but did not activate NebuAd's appliance, products, and/or services to intercept online transmission of their subscribers.

NebuAd appeared before Congress earlier this year, testifying that everything was legal and that no personally-identifying information was collected, but advocacy groups criticized the program as an invasion of privacy, saying it could be violating state and federal laws.

NebuAd laid off a "significant" number of employees after former CEO Bob Dykes resigned in September. It doesn't look good for NebuAd, but Phorm, another company utilizing DPI, has been given a green light by regulators in the U.K. who found the technology to be legal.

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