Federal Legislation Introduced Regarding Mobile Application Privacy

by White & Case LLP

On May 9, 2013, Georgia Congressman Hank Johnson introduced the Application Privacy, Protection and Security Act of 2013 (the "Apps Act"), a bill "[t]o provide for greater transparency in and user control over the treatment of data collected by mobile applications and to enhance the security of such data."1 The collection, use and disclosure of personal information obtained from the use of mobile applications ("apps") have been the focus of recent reports and actions taken by the Federal Trade Commission ("FTC") (see our previous posting), the California Attorney General Kamala Harris (see our previous posting) and industry organizations and interest groups.2 Although these actions are evidence of increasing industry, federal and state focus on mobile privacy concerns, currently there is no single standard on which app developers may rely to develop apps that comply with applicable laws. The Apps Act, if enacted, would as described below purport to replace conflicting state laws in this area and provide a foundation for a federal standard governing the collection, use and protection of personal information via apps.

The Apps Act is the latest effort to implement some of the privacy principles set forth in the Obama Administration's policy paper entitled "Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy" (see our previous posting). That policy statement was released over a year ago and to date the administration has failed to have legislation passed that implements the stated policies, a number of which are similar to privacy principles already in place in other parts of the world.

The Apps Act, if enacted, would require app developers to provide notice to app users of and obtain their consent to, the terms governing the collection, use, storage and sharing of their personal data, before the app collects such personal data.3 The required notice must include (1) the categories of personal data to be collected, purposes for which the personal data will be used, and third parties with whom personal data will be shared; and (2) a data retention policy governing the duration and terms of storage of personal data, including a description of users' rights concerning the use of their personal data and the process by which users may exercise those rights.4 To cover various forms of technology and the ways in which data can be accessed, collected and processed, the Apps Act specifically provides that an app developer granting a third party access to personal data collected by an app constitutes "sharing" of the data with that third party, regardless of whether the personal data is first transmitted to the developer.5 App developers would be required to take reasonable and appropriate measures to prevent unauthorized access to personal data as well as any de-identified data collected by the app.6 App developers would also need to provide users with means of (1) notifying the developer that they intend to stop using the app; and (2) requesting that the developer stop collecting their personal data, and at the users' option, either (a) to the extent practicable, delete their stored personal data, or (b) refrain from any further use or sharing of such data.7 App developers must comply with such requests within a reasonable and appropriate time after they are received.8

The Apps Act, if enacted, would apply to persons over which the FTC has authority under Section 5(a)(2) of the FTC Act,9 but app developers may seek to qualify for a safe harbor by adopting and following a consumer privacy code of conduct related to data collected by apps, which would be consistent with Obama Administration's earlier policy statements on consumer privacy.10 Violations of the Apps Act or its implementing regulations would be treated as violations of regulations regarding unfair or deceptive acts or practices under the FTC Act,11 and state attorneys general could also bring civil actions for legal or equitable relief on behalf of state residents where there is reason to believe that state residents' interests are adversely affected by an Apps Act violation.12 The Apps Act would supersede state law provisions to the extent that they conflict, specifically relate to the treatment of personal data or de-identified data, and provide a less protective level of transparency, user control or security in the treatment of personal data or de-identified data.13

The legislation is concise and, if enacted into law, would provide some of the clear rules for the handling of personal data that consumer groups have historically sought. The Marketing Research Association ("MRA"), however, has expressed concerns with practical applications of the Apps Act for entities with unpredictable data retention needs, as well as giving the FTC power to interpret the term "de-identified data" and define the term "personal data," and then lead the enforcement of the law and the resulting regulations implementing those terms.14 The traditional arguments against opt-in type privacy policies, similar to those called for by the legislation, will likely be made by marketing groups and app developers as the debate continues.

1 - Application Privacy, Protection and Security Act of 2013, H.R. 1913, 113th Cong. (2013), available at http://www.gpo.gov/fdsys/pkg/BILLS-113hr1913ih/pdf/BILLS-113hr1913ih.pdf (last accessed May 14, 2013). The Apps Act defines mobile applications as software programs that (a) run on the operating system of a mobile device (a smartphone, tablet computer or similar portable computing device that transmits data over a wireless connection); and (b) collect data from a user. Id. § 8(4), (5).
2 - See, e.g., Center for Democracy & Technology and the Future of Privacy Forum, Best Practices for Mobile Application Developers, available at https://www.cdt.org/files/pdfs/Best-Practices-Mobile-App-Developers.pdf (last accessed May 14, 2013); GSMA, Privacy Design Guidelines for Mobile Application Development, available at http://www.gsma.com/publicpolicy/wp-content/uploads/2012/03/gsmaprivacydesignguidelinesformobileapplicationdevelopmentv1.pdf (last accessed May 14, 2013); GSMA, Mobile Privacy Principles, available at http://www.gsma.com/publicpolicy/wp-content/uploads/2012/03/gsmaprivacyprinciples2012.pdf (last accessed May 14, 2013); Electronic Frontier Foundation, Mobile User Privacy Bill of Rights (March 2, 2012), available at https://www.eff.org/deeplinks/2012/03/best-practices-respect-mobile-user-bill-rights (last accessed May 14, 2013).
3 - Apps Act, § 2(a)(1). "Personal Data" is to be defined by the FTC in its implementing regulations, except the Apps Act provides that such term shall not include "de-identified data," defined as data that cannot reasonably be used to identify or infer information about, or otherwise be linked to, a particular individual or mobile device, as determined with a reasonable level of justified confidence based on the available methods and technologies, the nature of the data at issue, and the purposes for which the data will be used. Id. § 8(2), (6).
4 - Id. § 2(a)(2). The format, manner and timing of the required notice are to be specified by regulations to be issued by the FTC, and the Apps Act provides that the FTC should consider how to ensure the most effective and efficient communication to the user regarding the treatment of personal data. Id. § 2(a)(3).
5 - Id. § 2(a)(4).
6 - Id. § 2(c). A third party is defined as an entity that holds itself out to the public as separate from the app developer such that an app user acting reasonably under the circumstances would not expect the entity to be related to the developer or have access to personal data the user provides to the app developer. The term includes an affiliate of the app developer unless the affiliation is reasonably clear to the app users. Id. § 8(8),
7 - Id. § 2(b).
8 - Id.
9 - 15 U.S.C. § 45(a)(2).
10 - Apps Act, supra note 1, § 3(a), 5. In order to qualify for the safe harbor, such code of conduct must be (1) developed in a multi-stakeholder process convened by the National Telecommunications and Information Administration, as described in the Obama Administration's February 23, 2012 policy paper entitled "Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy"; and (2) approved as meeting the requirements of the FTC's implementing regulations. Id. For a discussion of this policy paper, see our previous posting.
11 - 15 U.S.C. § 57a(a)(1)(B).
12 - Apps Act, supra note 1, § 3(b), (c).
13 - Id. § 6.
14 - Press Release, Marketing Research Association, The Apps Act: Congressional Legislation Introduced to Restrict Mobile Data Collection and Use and Provide Consumer Transparency (H.R. 1913) (May 10, 2013), http://www.marketingresearch.org/news/2013/05/10/the-apps-act-congressional-legislation-introduced-to-restrict-mobile-data-collection.

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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