FTC Launches Investigation of Children's Mobile App Compliance with COPPA; Continues to Study "Comprehensive" Data Collection

by BakerHostetler
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[author: William J. Weber]

Monday, on a call with reporters to discuss the findings of its second survey of kids mobile device applications, attorneys with the Federal Trade Commission (1) called on industry – app developers, app stores, and third party recipients of collected data – to improve privacy disclosures; (2) said it is developing consumer education material in this area; and (3) announced it is launching an investigation into potential violations of the Children’s Online Privacy Protection Act and Section 5 of the FTC Act. COPPA requires verifiable parental consent before commercial website operators collect personal information from children under 13. The FTC declined to provide any details of the investigation, but was clearly irked by what its second survey found: The vast majority (80 percent) of hundreds of popular apps it examined from the Apple and Google online stores had no privacy policy. Of those that did, many policies were insufficient to inform parents of what was being collected. The FTC was also concerned about links in the apps to third-party social networking services, the presence of undisclosed advertising, and the capability for sales of virtual goods in many children’s apps. The agency also expressed concern over the collection of device IDs and geolocation information, but didn’t know whether this was being used for apps’ internal operations or to build consumer profiles. FTC said Monday’s announcement should “light a fire” under current efforts to improve privacy disclosures in mobile apps, including those of the California Attorney General (see my colleague Brian Karp’s recent post), the NTIA’s multistakeholder process to develop a code of conduct on mobile app transparency, and those of individual businesses and their associations. Finally, FTC reiterated support for general privacy legislation along the lines the administration has proposed, as well as revisions to COPPA.

Last week the FTC held a workshop with a broad range of stakeholders to examine “comprehensive” data collection about consumers' online activities. The day-long program covered familiar territory – don’t demonize/regulate particular technologies such as cookies; the benefits of data collection and free online services supported by targeted advertising versus the risk to intellectual privacy, loss of consumer bargaining power, potential i.d. theft and potential government intrusion; the merits of long-form privacy disclosures; whether companies should compete on the level of privacy protection they offer; the need to protect innovation and the internet economy; etc. At least one panelist took issue with the notion of the “comprehensive” label, saying it’s “a real lot of data,” but far from everything. This seemed to be the crux of the issue – should there be limits or prohibitions on the comprehensive collection and use of data on consumer behavior across the web? No consensus was reached on this point and it’s not clear what the FTC's next step will be. One thing is certain: These issues will vex regulators, legislators, businesses, and consumers well into 2013 and beyond.

 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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