Page last updated at 14:48 GMT, Wednesday, 9 April 2008 15:48 UK

Phorm 'illegal' says policy group

Eye on computer screens, SPL
Phorm says its system will have security benefits

Online advert system Phorm is illegal in the UK, the Foundation for Information Policy Research (Fipr), has argued in an open letter.

BT, Talk Talk and Virgin have all signed up to use Phorm, which targets adverts to users based on web habits.

Fipr believes Phorm contravenes the Regulation of Investigatory Powers Act 2000 (Ripa), which protects users from unlawful interception of information.

Phorm and BT have said the technology does not breach any UK laws.

The debate over the deployment of Phorm, legal or otherwise, is based on the interpretation of Ripa.

Fipr has written an open letter to the Information Commissioner Richard Thomas in which it argues that Phorm must not only seek the consent of web users but also of website operators.

Phorm's system works by "trawling" websites visited by users and then matches keywords from the content of the page to a profile.

Users are then targeted with adverts that are more tailored to their interests on websites that have signed up to Phorm's technology.

'Basic principle'

Nicholas Bohm, general counsel at Fipr, said: "The need for both parties to consent to interception in order for it to be lawful is an extremely basic principle within the legislation, and it cannot be lightly ignored or treated as a technicality."

We are willing for our opinion to be tested in law
Kent Ertugrul, Phorm

Richard Clayton, treasurer at Fipr, said: "The Phorm system is highly intrusive; it's like the Post Office opening all my letters to see what I'm interested in, merely so that I can be sent a better class of junk mail.

"Not surprisingly, when you look closely, this activity turns out to be illegal.

"We hope that the Information Commissioner will take careful note of our analysis when he expresses his opinion upon the scheme."

A spokesman for BT told BBC News: "Provided the customer has consented, we consider that there will generally be an implied consent from website owners.

"Secure and password-protection content will not be scanned, profiled or stored."

Kent Ertugrul, chief executive, of Phorm, said the company was "very, very comforable" that the firm was not breaching any laws.

'Web crawling'

"With regards to a website that is published openly and fairly, we are not breaching any laws in using information that is published on it," he said.

He said websites which discouraged web crawling from search engines would not be subject to Phorm's tools.

"We are willing for our view to be tested in law," said Mr Ertugrul.

In its open letter Fipr pointed out that many websites required registration, and only made their content available to specific people.

It added that many websites or particular pages within a website were part of the "unconnected web" and that their existence was only made known to a small number of trusted people.

Phorm has argued that its system gives users more privacy because they are able to opt out of the technology.

"Phorm has an on-off switch and does not store any personal data at all," said Mr Ertugrul.

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