DealerApp Vantage LLC, maker of custom mobile applications for car dealerships, recently settled allegations by the New Jersey Attorney General’s office that the company failed to adequately disclose how it collected and shared information about app users. DealerApp develops mobile apps that are customized with a particular dealership’s branding and collect information about potential customers for that dealership (including device location IDs, UDIDs, customer IDs, names, email addresses, phone numbers, zip codes, and vehicle information). According to the consent decree, however, DealerApp failed to adequately disclose to either app users or the dealerships that the app collected this information and transmitted it to both DealerApp and third party analytics companies, thus allegedly violating the New Jersey’s Consumer Fraud Act.

DealerApp has agreed to more clearly disclose its privacy practices, including how third party analytics companies may collect and use app user data. The company is prohibited from selling, renting, or otherwise transferring consumer information and/or other personal information to entities other than the particular dealership for which the mobile app was customized without the express consent of consumers or without providing proper disclosures and an opt-out mechanism. DealerApp will also pay a total of $48,724.33 in connection with the settlement, a portion of which is suspended pending compliance.

Tip: This case is a reminder that regulators are concerned about the adequacy of disclosures companies make in relation to apps, especially those that passively collect information.