Over the past three years, mobile application usage in the U.S. has increased by 111%, and over 50% of digital media consumption in the U.S. is now through mobile apps. As consumer use of mobile apps continues to rise, the Federal Trade Commission and state attorneys general have increased their focus on the privacy and data collection practices of mobile application providers.  As a result, the importance of implementing reasonable security practices, and also providing a clear and conspicuous privacy policy that is both understandable by an average consumer and fully discloses a company’s data collection and use practices cannot be overstated. Based on FTC guidelines and recent enforcement actions, counsel should consider the following when advising mobile application providers:

• Collect only the data you need.  Carefully consider the data an application can collect, versus the data an application should collect.  If the collection of sensitive data is not necessary for the product or service, then collecting such data will add an unnecessary layer of complexity and risk. If there is a legitimate business reason for collecting personal information, such information should be stored only as long as business needs require.  Companies should keep in mind that the FTC has expanded the universe of data that can be considered PII to include persistent identifiers, if such identifiers can be reasonably linked to a particular person or device.
• Consider whether data can be kept in a de-identified form.  If a mobile application collects consumer information, a company should consider whether data can be kept in a de-identified form without degrading the application’s features and functionalities.  If data can be de-identified, companies should ensure that third parties with access to such data are contractually prohibited from re-identifying the data.  In addition, companies should also periodically confirm that such third parties are complying with this requirement.
• Remember that failure to implement reasonable security measures may be considered deceptive or unfair.  The FTC has stated that “The touchstone of the FTC’s approach to data security is reasonableness: a company’s data security measures must be reasonable in light of the sensitivity and volume of consumer information it holds, the size and complexity of its data operations, and the cost of available tools to improve security and reduce vulnerabilities.” In addition to adopting reasonable security measures, the FTC has also made clear that companies must be able to comply with the security promises made in their privacy policies, and security assurances must accurately reflect a company’s actual security practices.  Thus, counsel should make certain that the mobile app provider understands the importance of maintaining reasonable security measures, addressing security vulnerabilities and accurately describing security practices to consumers.   
• Disclosures should keep up with the evolution of the product. Because the privacy policy must keep up with the evolution of the product, counsel must stay informed of new features, functionalities and data collection and use practices that may require modifications to the privacy policy or additional real-time disclosures to consumers while using the app.
• Give consumers a choice.  Consumer choice is a priority for the FTC, thus companies should provide end users with the option as to whether he or she wishes to share particular data with the mobile app.  However, as evidenced by FTC enforcement actions, if a company pledges in its privacy policy that consumers will have the ability to opt out of sharing certain data, the company may be engaging in a deceptive practice if it fails to provide that opt out option.
• Consider Third Party Integrations.  Third party integrations are an inherent part of most mobile applications.  For example, if the application uses third party analytics or is supported by a mobile ad network, the mobile app is most likely collecting or disclosing consumer data to third parties.  Understanding the data collection and use practices of third party integrations is necessary in order to ensure that the privacy policy incorporates any additional disclosures required by such integrations.
• Understand the End User experience:  The role of counsel for mobile application providers should not be limited to simply reviewing the privacy policy.  Understanding the end user experience is an important part of the legal review process, and this is best accomplished by downloading and using the mobile app through the eyes of an average consumer.   Counsel should consider the following with respect to consumers’ use of the application:
  • The privacy policy should be easily accessible and easy to understand by the average consumer.
  • Companies should obtain an end user’s affirmative, express consent prior to collecting personal information. The FTC made clear in its 2013 Mobile Privacy Disclosures Report that companies should provide “just-in-time” disclosures prior to collecting and sharing sensitive information, and recent enforcement actions have only underscored the importance of providing such disclosures to consumers and obtaining their affirmative express consent prior to collecting sensitive information.
  • Opt-out choices should be easy to find, easy to understand and easy to use. 
  • If a mobile app is not yet live, counsel should be added as a beta tester.

While the law will inevitably continue to struggle to keep up with technology, the FTC has made clear that the core issues remain the same:  consumers should be given control of how their data is collected and used, and companies must ensure that such data remains secure.