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FTC Urges Apps For Kids Must Disclose Data-Collecting Practices

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02/16/2012 | 08:40pm CET

--Federal Trade Commission says developers of apps for kids must better disclose programs' data-collecting practices

--Agency to conduct six-month review on disclosures; enforcement possible

--FTC last year collected first settlement involving an app

(Updates with additional context and comments beginning in the 2nd paragraph.)

   By Matt Jarzemsky 

The Federal Trade Commission urged developers of mobile apps for kids to provide more information on user-data collection and said it plans to review whether such software violates child privacy law.

The agency is taking a closer look at smartphone and tablet software mining phone numbers, subscriber IDs and other information from the devices, part of a broader push to toughen its privacy scrutiny. The FTC collected a $50,000 settlement from an app developer in August, in the agency's first case involving such programs.

The agency released a report Thursday that criticized developers and app marketplaces for not doing enough to disclose the data-collection practices of apps geared toward kids. It said it will conduct a six-month review to determine whether such apps violate the Children's Online Privacy Protection Act.

"Parents generally cannot determine, before downloading an app, whether the app poses risks related to the collection, use and sharing of their children's personal information," the FTC said in the report.

The FTC said apps should say what information they collect, how they will use it and with whom it will be shared. App developers should provide "simple and short disclosures or icons that are easy to find and understand on the small screen of a mobile device," the agency said.

The agency also said that app stores should provide clearer information about programs' data collection, and that third parties providing services within apps should play an active role in such disclosures.

The agency studied apps available in marketplaces run by Apple Inc. (>> Apple Inc.) and Google Inc. (>> Google Inc), the maker of the Android mobile operating system. It found "hundreds of pages" of programs intended for children, including some targeted to age ranges such as two- to five-year olds.

The survey followed the FTC collecting a $50,000 settlement from app developer W3 Innovations LLC, which does business as Broken Thumbs Apps, after allegations that some of the company's games violated the child privacy law.

The FTC alleged that several of the apps, including Emily's Girl World and Emily's Dress Up & Shop, collected thousands of e-mail addresses from children younger than 13 without their parents' consent.

"The two drivers for collecting data are to personalize the experience, and then secondly to socialize the experience," said Ed Lewis, chief executive of Media Chaperone, which made an app to help parents set privacy and spending controls on apps.

"Where that becomes an issue is when apps are actually collecting personal data on kids without parents' permission," Lewis said.

The Application Developers Alliance, a newly formed industry group, also backed the FTC's views.

"Parents should have clear, simple, easy-to-use tools to protect their children's privacy," said Jon Potter, president of the association. "Privacy, particularly kids privacy, is paramount to our members."

Mobile devices have seen hot sales growth in recent years, and it appears the appeal of such products isn't lost on the young. Nielsen said Thursday that 70% of children under 12 in tablet-owning households used the gadget in the fourth quarter.

The most common way children used tablets was to play downloaded games, followed by educational purposes and for entertainment while traveling, Nielsen said in a blog post titled "American families see tablets as playmate, teacher and babysitter."

The push to regulate software meant for kids is part of a broader online privacy watchdog effort by the FTC.

The past year, the agency has charged Facebook Inc., Twitter Inc. and Google with misleading consumers about the extent to which they protect their privacy. The companies each settled the allegations, agreeing to periodic assessments of their privacy practices by an independent auditor.

-By Matt Jarzemsky, Dow Jones Newswires; 212-416-2240; matthew.jarzemsky@dowjones.com

Stocks mentioned in the article : Google Inc, Apple Inc.
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