Advertising Law Alerts

January 7th, 2013

FTC Report Faults Mobile App Makers on Privacy

On December 10th, the Federal Trade Commission ("FTC") issued a staff report, "Mobile Apps for Kids: Disclosures Still Not Making the Grade" -- a follow-up to an earlier staff report, "Mobile Apps for Kids: Current Privacy Disclosures Are Disappointing." The new staff report included results of a survey of children's mobile "apps" available in Apple's App Store and Google's Android Market. The survey concluded that apps normally provide parents with little or no information about privacy or interactive features prior to download.

In the new survey, the FTC tested children's apps' practices and compared them to the apps' disclosures. The FTC also studied whether these children-focused apps shared kids' information with third parties without disclosing those facts to parents. Like the earlier report, this report found that parents are often not given adequate information about data collection, about who has access to their kids' data, and about how their kids' data is used. For example, the FTC found that:

  • Only 20 percent of the surveyed apps disclose any information about the app's privacy practices.
  • Nearly 60 percent of the surveyed apps collect geolocation, phone number, contacts, call logs, unique identifiers, and other information stored on the device; and send the information to the app developers or to advertising networks, analytics companies, and other third parties.
  • A large number of surveyed apps transmit information to the same few third parties, potentially allowing these third parties to aggregate data across multiple apps and create detailed user profiles.
  • Fifty-eight percent of the surveyed apps contain advertising, while only 15 percent disclosed that fact prior to download.
  • Twenty-two percent of the surveyed apps contain links to social networking services, while only nine percent disclosed that fact prior to download.
  • Seventeen percent of the surveyed apps allowed kids to make purchases within the app.  Although Google and Android Market both notified users of in-app purchasing, the FTC found that these notifications were often not prominent and confusing.

The report "strongly urge[d]" the mobile app industry to implement best practices, and included recommendations from the recent FTC Privacy Report such as (1) incorporating privacy protections into the design of mobile products and services ("privacy by design"); (2) offering parents easy-to-understand choices about the data collection and sharing through kids' apps; and (3) providing greater transparency about how data is collected, used, and shared through kids' apps. The report also contained an announcement that the FTC plans to issue educational materials for parents on these issues and to launch investigations into whether mobile app industry players are violating the Children's Online Privacy Protection Act or engaging in unfair or deceptive practices in violation of the Federal Trade Commission Act. The FTC also promised to conduct a third survey of children's mobile "apps" in the future.

The FTC's continued focus on transparency in privacy and data collection should serve as a strong reminder to app stores, developers, and third party service providers: privacy and data collection disclosures are a must and should be available to all users prior to download.

For more information on the FTC's new report, or on any other advertising or marketing law issues, please contact Greg Boyd at (212) 826 5581 or gboyd@fkks.com, Hannah Taylor at (212) 705 4849 or htaylor@fkks.com, or any other member of the Frankfurt Kurnit Advertising Group.