The Foundation for Information Policy Research has written an Open Letter to the Information Commissioner on the legality of Phorm’s advertising system. FIPR has also issued a Press Release which says, in part:

The controversial Phorm system is to be deployed by three of Britain’s largest ISPs, BT, Talk Talk and Virgin Media. However, in FIPR’s view the system will be processing data illegally:

* It will involve the processing of sensitive personal data: political opinions, sexual proclivities, religious views, and health — but it will not be operated by all of the ISPs on an “opt-in” basis, as is required by European Data Protection Law.
* Despite the attempts at anonymisation within the system, some people will remain identifiable because of the nature of their searches and the sites they choose to visit.
* The system will inevitably be looking at the content of some people’s email, into chat rooms and at social networking activity. Although well-known sites are said to be excluded, there are tens or hundreds of thousands of other low volume or semi-private systems.

More significantly, the Phorm system will be “intercepting” traffic within the meaning of s1 of the Regulation of Investigatory Powers Act 2000 (RIPA). In order for this to be lawful then permission is needed from not only the person making the web request BUT ALSO from the operator of the web site involved (and if it is a web-mail system, the sender of the email as well).

FIPR believes that although in some cases this permission can be assumed, in many other cases, it is explicitly NOT given — making the Phorm system illegal to operate in the UK:

* Many websites require registration, and only make their contents available to specific people.
* Many websites or particular pages within a website are part of the “unconnected web” — their existence is only made known to a small number of trusted people.

The full text of the open letter is here.