FTC Testifies on Consumer Privacy and Protection in the Mobile Marketplace

The Federal Trade Commission today told Congress that while mobile technology, such as smart phones, is giving consumers a vast array of new products and services, it also presents new consumer privacy challenges.

Testifying on behalf of the Commission before the Senate Committee on Commerce, Science and Transportation, David Vladeck, Director of the FTC’s Bureau of Consumer Protection, said the privacy challenges are of special concern when it comes to young people.

The FTC is committed to protecting consumers in the mobile marketplace, where vast amounts of data can be collected from consumers without their knowledge, the testimony states. “The Wall Street Journal has documented numerous companies gaining access to detailed information – such as age, gender, precise location, and the unique identifiers associated with a particular mobile device – that can be used to track and predict consumers’ every move.” The data also is used to target specific ads to users.

A preliminary FTC staff report on Internet privacy, released in December 2010, proposed a framework to protect consumer privacy consisting of three main recommendations, each of which applies to mobile technology: “privacy by design,” simpler and streamlined privacy choices, and transparency. The staff report also called on stakeholders to provide a mechanism to give consumers more control over the data that is being collected from them, including for purposes of delivering behavioral advertising. The mechanism, often referred to as “Do Not Track,” has the support of the majority of the Commission. The testimony notes that the issues surrounding implementation of Do Not Track for web browsing are the same on mobile devices and computers. Staff also is examining how Do Not Track could be applied to mobile applications.

The FTC testimony also notes that children and teens’ use of mobile devices is increasing rapidly. According to a Pew Internet and American Life Project, the number of 12 to 17 year olds who had a cell phone increased from 45 percent in 2004 to 75 percent by 2009. The testimony states that young people are using their cell phones not only to make calls, but also are using new mobile apps that raise privacy concerns such as location-based tracking.

“The Commission has a long history of working to protect the privacy of young people in the online environment,” the testimony states. “In recent years, the advent of new technologies and new ways to collect data, including through mobile devices, has heightened concerns about the protection of young people when online.”

In April 2010, the agency launched an accelerated review of the Children’s Online Privacy Protection (COPPA) Rule that requires websites to get verifiable parental consent before collecting information from children under 13 years old.

The testimony notes that the consensus of participants in a 2010 roundtable on the COPPA Rule review, as well as those who have commented on the review, has been that “the COPPA statute and the Rule were written broadly enough to encompass most forms of mobile communications without the need for statutory change. For example, current technologies such as mobile applications, interactive games, voice-over-Internet services, and social networking services that access the Internet or a wide-area network are ‘online services’ covered by COPPA. . . . Commission staff is assessing new technologies to determine whether they are encompassed by, and conducted in accordance with, COPPA’s parameters,” the testimony states.

For more than 40 years, the FTC has been protecting consumer privacy rights through policy initiatives, consumer and business education campaigns and law enforcement efforts. In the last fifteen years, the FTC has brought more than 300 privacy-related cases, including: 30 data security cases; 64 cases against companies for improperly calling consumers on the Do Not Call registry; 86 cases against companies for violating the Fair Credit Reporting Act (FCRA) 96 spam cases; 15 spyware cases; and 16 cases against companies for violating COPPA, the testimony notes.

The FTC has taken a number of steps to focus on mobile technology, including hiring technologists and assembling a team to conduct research, monitor the various platforms, app stores, and applications, and train other agency staff on mobile issues, the testimony states.

“Protecting the privacy and security of consumer information is a critical component of the Commission’s focus on mobile technologies and services. We will continue to bring law enforcement actions where appropriate and work with industry and consumer groups to develop workable solutions that allow companies to continue to innovate and give consumers the new products and services they desire.”

The Commission vote to approve the testimony was 4-1 with Commissioner William E. Kovacic voting no. Commissioner Kovacic dissents to the extent that the testimony endorses a Do Not Track mechanism, because he believes it is premature.

The Federal Trade Commission works for consumers to prevent fraudulent, deceptive, and unfair business practices and to provide information to help spot, stop, and avoid them. To file a complaint in English or Spanish, visit the FTC’s online Complaint Assistant or call 1-877-FTC-HELP (1-877-382-4357). The FTC enters complaints into Consumer Sentinel, a secure, online database available to more than 2,000 civil and criminal law enforcement agencies in the U.S. and abroad. The FTC’s website provides free information on a variety of consumer topics. Like the FTC on Facebook and follow us on Twitter.

(Mobile Testimony.wpd)