I spy with my little lie...

The UK's Foundation for Information Policy Research (Fipr) has published an open letter to the Information Commissioner, dubbing Phorm, an online ad system, illegal.

Fipr said Phorm violates the Regulation of Investigatory Powers Act 2000 (Ripa), developed to protect users from illegal information interception. The final interpretation of Ripa will determine whether Phorm — and other behavioral ad technology — are legal in the UK.

According to the BBC, Phorm crawls pages a user has visited, then pairs keywords from the content to a user's profile. On websites subscribed to Phorm's OIX network, the user is targeted with ads based on his or her interests.

Search Engine World says Phorm's OIX system works by inviting ISPs — which increasingly seek opportunities to cash in on online advertising — to share customer browsing records with advertisers, who in turn provide revenue on participating websites.

In an email to MarketingVOX, Steve Trewick of Orange.net wrote, "Phorm's technology intercepts user traffic and creates a mirrored copy of the page directly from their HTTP stream. This is why it falls afoul of Ripa."

In its letter to the Information Commissioner, Fipr argued Phorm must actively seek the consent of web users and website operators before gathering any information.

"Provided the customer has consented, we consider that there will generally be an implied consent from website owners," a BT spokesman told BBC News. Secure, password-protected content will not be profiled, stored or scanned, he added.

CEO Kent Ertugrul of Phorm took a similar position. "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 stated.

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

On its website, Phorm positions itself as a privacy advocate, not a violator. Clients include Virgin, Talk Talk and BT.

The company expects to expand to the US this year.