In December 2013, the Federal Trade Commission demonstrated that next year it will be focusing on two cutting edge privacy issues.  First, based on a recent consent decree coupled with earlier mobile recommendations, the FTC will be focusing on mobile application privacy and transparency, particularly when collecting “sensitive” information such as geolocation information.  In addition, the FTC began encouraging industry standards related to greater transparency for paid content that may look like unpaid articles (known as native advertising) by hosting a workshop last week.  The FTC’s guidance and enforcement activities in both areas are primarily related to its authority under Section 5 of the FTC Act to police deceptive trade practices.

In two alerts summarized below and available in full by clicking on the titles, we analyze both issues and what they mean for companies developing mobile applications or promoting native advertising.

Recent FTC Enforcement Action Shines the Light on Mobile Apps’ Collection of Precise Geolocation

The enforcement action against Goldenshores Technology is the first FTC consent decree related to the collection and use of geolocation information. Geolocation information and persistent device ID were collected when a user opened the Goldenshores’ flashlight app, and that information was shared with third parties, allowing the application and advertising networks to track a user’s location over time.

What is noteworthy with regard to the FTC consent decree is that the FTC defined geolocation as “sensitive” information that warranted the disclosure of the collection not only in the privacy policy, but also expressly in the Google Play download page for the application and/or via just in time notices, and gave specific recommendations on disclosing both what was being collected and why.  The FTC will likely continue pursuing enforcement actions against companies that collect geolocation information in an allegedly deceptive manner. Companies with mobile applications that collect geolocation should review their collection and use practices as a result of this consent decree.

Blurring Lines on Native Advertising

Paid advertisements integrated into or designed to mimic unpaid website content or news articles, commonly known as “native ads,” have become ubiquitous across the Internet, including major news outlets (as well as start up and niche online news publishers).  However, the dramatic—and somewhat chaotic—proliferation of native ads has prompted considerable debate about their effectiveness and use among advertising industry executives, website owners, consumer advocates, academics and government regulators.

The FTC hosted a day-long workshop of talks and panels focused on how native advertising is employed, whether such ads confuse consumers, and whether such confusion is ultimately harmful.  On the same day, the Internet Advertising Bureau (“IAB”), an industry group comprised of approximately 600 companies engaged in digital advertising, published its Native Advertising Playbook.  These two related events demonstrate that the industry practices for native advertising will be an evolving standard over the next 12 to 18 months; companies engaged in widespread promotion of native advertising should review their current practices and be prepared to become even more transparent in 2014.