Internet advertisers that target consumers using information gained from monitoring their online activity could be the subject of a study by the Office of Fair Trading (OFT) later this year.

The OFT said it will look at the impact on consumers from potentially misleading advertising and pricing of goods and services and is asking individuals, businesses and other organisations for their views on the scope of the study.

The organisation wants to look at how consumer law relates to advertising and pricing with a particular focus on the internet and will look at which online and offline pricing and advertising practices have potential to harm consumers.

The OFT said it may also look at the use of personal information in advertising and pricing – in particular where information from a consumer’s online activity is used to target the internet advertising he or she receives.

Heather Clayton, senior director of the OFT’s consumer market group said: “The way that businesses advertise and price goods and services constantly evolves, and we need to keep up to date on how consumers view these adverts, and the types of advertising and prices which may mislead.

“Before starting our study, we want to understand from consumer groups, businesses and other organisations which areas they think we should focus on.”

Shares in the controversial AIM-listed firm Phorm, which monitors the habits of internet users, plummeted after the OFT’s announcement.

Phorm has come in for criticism from privacy campaigners who have accused it of being an online snooper.

The technology firm suffered another blow last month after telecoms giant BT said it had “no immediate plans” to use its controversial Webwise software which tracks internet usage for advertising purposes.

Webwise stores information on the sites web-users visit in order to target them with advertising on other pages.

The software has come in for heavy criticism – although Phorm says the software is fully anonymous and gives people regular opportunities to turn it off.

The decision by BT – the UK’s biggest broadband provider with 4.8 million customers – sent Phorm’s shares tumbling, wiping more than £35 million from the value of the company.

BT said it would instead be concentrating its efforts on developing next generation broadband and television services.

Phorm shrugged off BT’s decision and said efforts to deploy its software in the UK were “on-going”.

It added that it was putting considerable effort into “faster moving” overseas opportunities, to minimise its dependence on any one country or ISP.

The company is trialling its software with South Korea’s largest ISP and is involved in 15 other markets, with discussions with several major broadband operators under way.