On September 5, 2012, the Federal Trade Commission (FTC) released a guide to help developers of mobile applications (apps) observe truth-in-advertising and fundamental privacy principles when developing, offering, and marketing their apps.¹ The guide is directed at independent developers and small companies, but it may be useful for companies of all sizes. The guide, which was created after an FTC report issued this spring cited deficiencies in the privacy disclosures in mobile apps for children,² indicates that the privacy practices of mobile app developers may continue to be an enforcement priority for the FTC.

Truth in Advertising

First, with respect to truthful advertising, the guide offers practical guidance to help app developers avoid unfair or deceptive advertising practices with respect to statements on websites, in app stores, and in apps themselves. The guide urges app developers to do the following:

• Avoid making false or misleading claims and omitting important information from advertising statements.
• Back up objective claims about apps with competent and reliable evidence. The guide also notes that if an app developer claims that its app provides benefits related to health, safety, or performance, competent and reliable scientific evidence may be required.
• Make clear and conspicuous disclosures of any information required to make the app developer's statements accurate. The guide notes that the FTC has taken action against companies that have buried important terms and conditions in long license agreements, in dense blocks of legal text, or behind vague hyperlinks.³

Privacy

Second, the guide provides several basic privacy compliance principles for app developers to incorporate into their practices. It recommends that app developers do the following:

• Build privacy considerations into apps and data-handling practices—that is, engage in privacy by design.⁴ The guide urges developers to select default app settings that are consistent with consumer expectations and to obtain users' express agreement for any collection or sharing of information that is not apparent.
• Be transparent about data practices. The guide urges developers to explain what information they collect from users, as well as how that information is used and disclosed.⁵ The guide also encourages app developers to make disclosures clear and to use design elements such as color and fonts to draw attention to important information.
• Offer choices that are easy to find and easy to use. The guide recommends that app developers provide users with tools such as privacy settings, opt-outs, or other means to control how their personal information is collected, used, and shared, and to make those options clear and conspicuous to users.
• Honor privacy promises. Noting the FTC's history of taking action against companies that failed to live up to privacy- or data-security-related representations to consumers, the guide notes that companies must live up to any promises they make in their apps, on websites, in app stores, and otherwise. In particular, the guide states that app developers must obtain users' affirmative permission before applying any material changes to their privacy practices regarding any previously collected personal information.
• Protect kids' privacy. The guide notes that under the Children's Online Privacy Protection Act (COPPA) and the FTC's COPPA Rule, any operator whose app is directed at kids under age 13, or who has actual knowledge that the app collects personal information from kids under 13, must explain its information practices clearly and obtain parental consent before collecting personal information from children. Additionally, the guide notes that operators must use reasonable procedures to keep personal information collected from children under 13 confidential and secure.
• Collect sensitive information only with consent. The guide recommends obtaining affirmative consent from users to collect any sensitive information, such as medical, financial, or precise geolocation information.⁶
• Keep user data secure. The guide notes that even if app developers don't make representations about their security measures with respect to users' information, they still must take reasonable steps to keep sensitive data secure.⁷ The guide recommends that app developers collect only the data they need, secure data they keep by taking reasonable protections against well-known security risks, limit access to a need-to-know basis, and safely dispose of data that they no longer need.

The release of the guide signals the FTC's continued attention toward the mobile marketplace, and it shows that the FTC will hold developers of mobile apps to the same standards as companies that operate websites or other online services. Developers of mobile apps should consider the principles and recommendations in the guide when developing, advertising, and operating their apps.

Our attorneys routinely counsel clients on issues involved in developing and marketing mobile apps, including advertising, privacy, and data security matters. If you have questions in these areas, please contact Lydia Parnes at lparnes@wsgr.com or (202) 973-8801; Matthew Staples at mstaples@wsgr.com or (206) 883-2583; or any of the many members of our privacy and data security practice.

¹ The FTC's guide is available at http://business.ftc.gov/documents/bus81-marketing-your-mobile-app.

² See Mobile Apps for Kids: Current Privacy Disclosures are Disappointing (released February 16, 2012), at http://ftc.gov/os/2012/02/120216mobile_apps_kids.pdf.

³ For an example of such an enforcement action, please see the WSGR Alert regarding the FTC's 2009 settlement with Sears Holdings Management Corporation at http://www.wsgr.com/wsgr/Display.aspx?SectionName=publications/PDFSearch/wsgralert_sears.htm.

⁴ "Privacy by design" entails incorporating substantive privacy protections into a company's practices (such as data security, reasonable collection limits, sound retention and disposal practices, and data accuracy) and maintaining comprehensive data-management procedures throughout the lifecycles of their products and services in order to implement those substantive principles. The FTC recommended that all companies engage in privacy by design in its March 2012 report on protecting consumer privacy, Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers (the FTC Privacy Report), available at http://www.ftc.gov/os/2012/03/120326privacyreport.pdf. The WSGR Alert discussing the FTC Privacy Report is available at http://www.wsgr.com/WSGR/Display.aspx?SectionName=publications/PDFSearch/wsgralert-FTC-final-privacy-report.htm.

⁵ The FTC held a workshop titled "In Short: Advertising & Privacy Disclosures in a Digital World" on May 30, 2012, focusing in part on disclosures in apps and otherwise on mobile devices. Transcripts and other materials from the workshop are available at http://www.ftc.gov/bcp/workshops/inshort/inshort-agenda.pdf.

⁶ This is consistent with the FTC's principles set forth in the FTC Privacy Report. See FTC Privacy Report, pp. 58-60.

⁷ The FTC has taken action against several companies for a failure to maintain reasonable data security practices. See, e.g., the FTC's enforcement action against BJ's Wholesale Club, Inc., as summarized in the WSGR Alert available at http://www.wsgr.com/WSGR/Display.aspx?SectionName=publications/PDFSearch/clientalert_bjs_wholesale.htm.