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December 13, 2012

FTC Report Faults App Developers on Data Collection From Kids

By: Ifrah Law

The Federal Trade Commission released a report on December 10, 2012, that concluded that mobile apps targeted at children were collecting large amounts of data from children and sharing their information with advertisers without disclosing their practices.

The FTC report examined 400 leading apps designed for kids that were sold in the mobile stores run by Apple and Google. The agency said it is launching an investigation to determine if certain mobile apps developers have violated the Children’s Online Privacy Protection Act (COPPA) or engaged in unfair or deceptive trade practices.

The FTC’s authority over children’s mobile apps comes from laws that prohibit unfair and deceptive acts of commerce, as well as from COPPA, which requires operators of online services for children under 13 to get consent from parents before collecting and sharing personal information, among other requirements.

The report itself does not call for regulatory changes. However, the FTC is reviewing COPPA to determine if it needs to be updated, and is expected to announce updates soon COPPA was enacted in 1998, and FTC officials say the law needs to be changed to reflect the growing prominence of mobile apps and social networking sites used by children. The regulations under COPPA have not been substantially revised since its introduction. COPPA sets forth specific requirements for websites aimed at children, but its guidance on mobile technology is far less clear.

The FTC proposed updating COPPA, but it has been met with pushback thus far from technology companies. The proposed changes could significantly increase the need for children’s sites and apps to obtain parental permission to collect certain types of data, including device IDs, photos, and voice recordings. FTC officials have also emphasized that they consider the exact location of a mobile device to be personal information that would require parental permission to collect.

The FTC report noted that it was particularly concerned with the collection of a user’s device ID, which is a string of letters or numbers that identifies each mobile device. Nearly 60 percent of the mobile apps that the FTC reviewed transmitted the device ID. Some of those apps then shared that ID with an advertising network or other third party, including some apps that disclosed the phone number and location of the device. Additionally, more than half the apps also contained interactive features such as advertising or in-app purchases that were largely undisclosed to parents.

Only 20 percent of the apps reviewed in the report disclosed any information about the app’s privacy practices. FTC Chairman Jon Leibowitz said, “Our study shows that kids’ apps siphon an alarming amount of information from mobile devices without disclosing this fact to parents.”

This week’s report serves as further notice to all mobile app developers that the FTC is monitoring the mobile app market.  App developers, particularly developers that are targeting children, need to review their compliance with FTC guidelines, as well as their overall truth-in-advertising and data privacy policies, to make sure their apps are complying. The FTC has made clear that it will take enforcement actions against industry participants and will continue to aggressively pursue action in the future.