Antitrust Law Daily Wrap Up, CONSUMER PROTECTION NEWS: Mobile shopping apps lack pre-purchase privacy, liability disclosures: FTC staff report, (Aug 1, 2014)

By Greg Hammond, J.D.

The FTC has issued a staff report finding that the majority of mobile shopping apps fail to provide consumers with meaningful payment dispute or privacy information prior to download. The report, entitled “What’s the Deal? An FTC Study on Mobile Shopping Apps,” consequently sets forth a number of recommendations to companies that sell or provide mobile shopping apps to consumers.

The study reviewed some of the most popular shopping apps found on Google Play and the iTunes App Store. Specifically, it looked at 121 different apps, falling under three categories: (1) price comparison apps, which enable consumers to compare prices on particular products in real-time; (2) “deal” apps, which provide discounts or coupons to consumers; and (3) in-store purchase apps, which allow consumers to pay for in-store goods on their mobile phones.

As part of its study, the FTC staff reviewed: (1) in-store purchase apps’ pre-download disclosures regarding consumer liability and redress rights in the event something goes wrong with a purchase, and (2) pre-download disclosures regarding the type of data the apps collect, how the data will be used, with whom it will be shared, and how it will be secured.

The staff found that 14 out of 30 in-store purchase apps did not have any disclosure on dispute resolution or liability limits policies prior to download. Of the 16 that did provide such disclosures, only nine had any written protections for their users. In addition, an overwhelming majority of the apps had privacy policies that informed consumers of the collection of personal information, such as name, contact information, social security number, driver’s license, location, date of birth, gender, transaction data, or data from third parties. However, nearly all of the privacy policies were vague or broad in how the companies used or shared the collected data.

“As mobile apps become more central to the shopping experience, it’s important that consumers have meaningful information about how those apps work before they download them,” stated FTC Bureau of Consumer Protection director Jessica Rich. “Consumers should not be left in the dark about their potential liability for erroneous or unauthorized charges or about the way shopping apps handle their data.”

In response to its findings, the FTC staff issued a number of recommendations to companies that provide mobile shopping apps to consumers, including:

• Disclosing consumers’ rights and liability limits for unauthorized, fraudulent, or erroneous transactions;

• Clearly describing how they collect, use, and share consumer data; and

• Ensuring that their strong data security promises translate into strong data security practices.

In addition, the staff made recommendations for consumers that use shopping apps, including:

• Looking for app dispute resolution procedures and liability limits prior to download, and considering the payment methods used to fund their purchases; and

• Seeking information on how their data will be collected, used, and shared prior to download.

News: ConsumerProtection Privacy FederalTradeCommissionNews