Recent actions against two prominent mobile app developers serve as a warning for companies that authorize third parties to collect and use information over time for advertising in mobile apps (known as interest-based advertising or IBA). On July 14, the Council of Better Business Bureau’s Online Interest-Based Advertising Accountability Program issued two formal decisions against SEGA and iTriage LLC for alleged violations of the Digital Advertising Alliance’s (DAA) Self-Regulatory Principles in the mobile environment (Mobile Guidance).

Along with other recent developments, these actions show that self-regulatory programs—and regulators such as the FTC—now expect companies to provide adequate notice and choice for interest-based advertising in mobile apps. The Accountability Program will bring actions against any website or mobile app that is engaged in IBA, regardless of whether the company expressly adheres to the DAA’s Principles.

Alleged Failures to Comply with the DAA’s Mobile Guidance

The Accountability Program alleged that SEGA’s “Sonic Runners” mobile gaming app and a health app called “iTriage,” owned by a subsidiary of Aetna, allowed third parties to collect and use information (including iTriage users’ in-app behavior such as the features and tools used) for IBA purposes, without providing adequate notice and choice under the DAA’s Mobile Guidance. For example, the decisions alleged that the companies failed to adequately disclose third-party IBA practices in their privacy policies. The companies also allegedly failed to provide so-called “enhanced notice” outside of the privacy policy to alert users that information collected through apps would be used for IBA purposes. Under the DAA’s Mobile Guidance, companies must provide such enhanced notice either prior to download (e.g., in the app store on the application’s page), during download, on first opening of the app, or at the time data is first collected and in the application’s settings or privacy policy.

According to the decisions, the mobile apps also allowed third parties to collect precise location data (e.g., lat/long coordinates derived from GPS or WiFi network signals on a user’s mobile device) for IBA purposes without obtaining consumers’ affirmative consent. In particular, the Accountability Program noted in its decision against iTriage that the app’s settings may be used to obtain consent only “if they satisfy the actual requirement, e.g., provide notice of transfer of location data to a third party for IBA.” In other words, if mobile apps rely on the platform-provided consent mechanisms in iOS or Android, the consent language must specifically disclose the fact that location data will be passed to third parties for IBA purposes.

Finally, the decisions made it clear that the Accountability Program’s staff will review companies’ practices with respect to all types of information collected or used for IBA purposes, including personal directory data (such as contacts, calendars, or photos on a user’s device), health data, children’s data, and other sensitive data. For example, in its decision against SEGA, the Accountability Program concluded that SEGA allowed third parties to collect information about children under the age of 13 without obtaining verifiable parental consent, in violation of the Children’s Online Privacy Protection Act (COPPA).

Key Takeaways

These actions demonstrate the industry’s willingness to ramp up self-regulatory enforcement in mobile apps to keep pace with the FTC’s increasing interest in mobile privacy. Mobile app developers should review their practices and ensure that they comply with relevant DAA and FTC guidance before they allow third parties to collect and use information through mobile apps for IBA purposes. In particular, companies can review the Accountability Program’s compliance tips and take the following additional steps:

• confirm whether you authorize third parties to collect or use information on websites or in mobile apps for IBA purposes;
• revise your privacy policies to accurately describe how third parties collect and use information on websites or in mobile apps for IBA purposes and how users may opt out;
• ensure that you provide “enhanced notice” of third-party IBA practices in mobile apps, either prior to download (e.g., in the app store on the application’s page), during download, on first opening of the app, or at the time cross-app data is first collected and in the app’s settings or privacy policy;
• obtain affirmative consent to collect and share precise location data through a mechanism that specifically discloses the fact that location data will be passed to third parties for IBA purposes; and
• do not collect or share with third parties information from children under age 13, unless you obtain verifiable parental consent, as required under COPPA.