Building on the privacy concepts articulated in their December 2012 report,¹ the Federal Trade Commission (FTC) released a staff report on February 1, which recommends a framework for mobile privacy.² Like the report³ issued last month by California Attorney General Kamala Harris, the FTC report gives reasons for increased concerns over mobile device privacy issues, and proposes specific requirements for app developers, operating system providers, ad networks, and other actors in the growing mobile device ecosystem.

The FTC stressed that these players in the mobile applications industry should focus on greater transparency for consumers on how their personal data will be collected and used. If the market does not quickly do so itself, regulators are poised to step in to assure that consumers understand how mobile applications will collect and use their personal data. Further emphasizing its commitment to addressing mobile privacy concerns, the FTC also announced its settlement with social networking app developer Path, which was fined $800,000 for violations of the Children’s Online Privacy Protection Act (COPPA) and other FTC regulations,⁴ including charges that it illegally collected personal information from children without their parents’ consent.

The FTC report goes beyond existing regulations, however, citing important distinctions that warrant heightened privacy concerns when dealing with mobile devices. The rapid growth of mobile devices such as smartphones and tablets has yielded enormous value to businesses and consumers, but the FTC argues that these benefits have come with unique privacy challenges. For example, mobile devices are almost always on and carried everywhere by their owners, creating the potential for the collection of sensitive personal information such as location data, health conditions, and private communication. Further exacerbating these privacy issues, the FTC argues, is the complicated nature of the mobile device ecosystem, making it difficult for most users to control or even understand how their private data may be used.

The report includes these following recommendations for specific actors in the mobile device ecosystem.

Platform/operating system providers should:

• provide just-in-time disclosures to consumers and obtain affirmative express consent before allowing apps to access sensitive data
• consider developing a one-stop “dashboard” approach to allow consumer review of types of content accessed by apps
• consider developing icons to depict the transmission of user data
• promote app developer best practices
• consider disclosing the platform provider’s review process undertaken prior to making applications available in its app store
• consider offering a Do Not Track mechanism for mobile devices.

• have a privacy policy that is easily accessible through app stores
• provide just-in-time disclosures and obtain affirmative express consent before collecting and sharing sensitive information
• improve coordination with ad networks and other third parties so that app developers can provide accurate disclosures to consumers
• consider participation in self-regulatory programs.

• communicate with app developers so that developers can provide truthful disclosures to consumers
• work with platforms to ensure effective implementation of mobile Do Not Track mechanisms.

• develop short-form disclosures for app developers
• promote standardized app developer privacy policies⁵
• educate app developers on privacy issues.

Many of the concerns addressed by the FTC report are expressed in their settlement with Path.⁶ In their complaint, the FTC asserted that Path had deceived its users by stating that users “should always be in control of [their] information and experience” while at the same time automatically collecting personal information from users’ mobile devices without notifying the users or obtaining their express consent to these actions. The FTC further claimed that Path collected personal information from users who had indicated that they were under the age of 13, doing so without the permission of their parents – a violation of rules adopted under COPPA. As part of their settlement agreement with the FTC, Path agreed to pay an $800,000 fine, to comply with existing regulations, and to have its privacy efforts regularly monitored by an outside agency.

Among the messages to take away from these announcements is that the violations enumerated in the Path complaint could be avoided by following the specific recommendations laid out in the FTC report. The FTC argues that the increased trust that would result from these steps would be beneficial to all stakeholders in the mobile marketplace, and has actively encouraged an ongoing conversation among these stakeholders to address the many outstanding questions in this area. With this report, the FTC has indicated that it will continue to aggressively monitor and enforce those regulations currently on the books.

Endnotes

1 For details, see Pepper Hamilton LLP’s June 1, 2012 Client Alert, "FTC Releases Final Report on Consumer Privacy Best Practices," available at http://www.pepperlaw.com/publications_update.aspx?ArticleKey=2375.

2 Available at http://www.ftc.gov/os/2013/02/130201mobileprivacyreport.pdf.

3 For details, see Pepper Hamilton LLP’s January 23, 2013 Client Alert, "CA Attorney General’s Report Highlights Best Practices for Mobile App Developers," available at http://www.pepperlaw.com/publications_update.aspx?ArticleKey=2538.

4 United States v. Path, Inc., No. C13-0448 (N.D. Cal. 2013) (proposed consent order), available at http://www.ftc.gov/os/caselist/1223158/index.shtm.

5 The California Legislature has recently proposed a bill requiring privacy policies “to be no more than 100 words, be written in clear and concise language, be written at no greater than an 8th grade reading level, and to include a statement indicating whether the personally identifiable information may be sold or shared with others, and if so, how and with whom the information may be shared.” Cal. Assembly 242, 2013-2014 Reg. Sess. (Feb. 6, 2013), available at http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=201320140AB242.

6 The FTC has pursued other companies for similar violations. See also In the Matter of Frostwire LLC, No. 1:11-cv-23643 (S.D. Fla. 2011) (consent order), available at http://www.ftc.gov/os/caselist/1123041/index.shtm; and In the matter of Filiquarian Publishing, LLC, FTC File No. 112 3195 (2013) (proposed consent order), available at http://www.ftc.gov/os/caselist/1123195/index.shtm.