The Federal Trade Commission (“FTC”) has continued to take an active interest in mobile privacy issues, especially with regard to children. Mobile payments and mobile commerce are likely to be another focus of this ongoing effort, with the FTC Bureau of Consumer Protection recently transferring its team for mobile issues into its Division of Financial Practices.
Report Critiques Disclosures for Mobile Apps Aimed at Children
On February 16, 2012, the FTC released a staff report on children’s mobile applications (“apps”), summarizing its conclusions in the title: “Mobile Apps for Kids: Current Privacy Disclosures Are Disappointing.” Intended to be part of a “warning call” to industry on the need to provide better information to parents, the report reviewed hundreds of promotional pages for apps available for children through online markets offered in app stores to determine what information was provided about the apps’ data collection and sharing capabilities. The survey also covered apps’ social media, rating, and parental control features. The FTC says that it will be conducting additional reviews in the coming months to determine whether some of the apps are violating the Children’s Online Privacy Protection Act.
The report states that all members of the mobile ecosystem should play an active role in providing parents with easy access to basic information about data practices, and recommends that:
- App developers should provide simple and short disclosures or icons to provide notice of certain activities; and
- App stores should provide a more consistent way for developers to present this notice to parents.
Recognizing the challenge of providing disclosures within the small screen size of mobile devices, staff stated that this topic will be addressed as part of the FTC’s planned workshop on updating its “Dot Com Disclosure” guides for online notices and disclosures.
Warning Letters on Background Screening Apps
The FTC has sent warning letters to the providers of six applications that can be used to obtain background information about individuals, allegedly including criminal history information. The letters expressed concern that such information could be used to make decisions about an individual’s eligibility for employment, housing, or credit.
Under the Fair Credit Reporting Act (“FCRA”), companies that assemble or evaluate certain information on consumers for third party use in making such decisions may be deemed “consumer reporting agencies.” As such, companies would have to comply with various legal obligations such as taking reasonable steps to ensure maximum accuracy and providing clients with notice of their FCRA duties. Consumer reporting agencies must also afford consumers copies of reports that are used as a basis for adverse action against them and the ability to contest information believed to be incorrect.
While the FTC stated that it has not determined whether the apps are violating the law, it encouraged the companies to review their products and procedures for legal compliance.
Planned Workshop on Mobile Payments
The FTC will convene a public workshop on April 26, 2012, to discuss mobile payment technologies and their consumer impact.
The agency is accepting public comments in advance of the workshop. The announcement of the workshop set out numerous potential discussion questions on topics such as current mobile payments technologies and business models, risks to consumers of these technologies, data practices, and international perspectives.