- Randy Hutchinson is president and CEO of the Mid-South Better Business Bureau.
Would you describe yourself as a “church-going Christian” or a “wealthy mother living in the suburbs”? What if you were “wealthy but not healthy”?
A data aggregator called InMarket Media collected location data from hundreds of millions of mobile devices and cross-referenced it with other data to categorize users into about 2,000 different categories.
However, the Federal Trade Commission said the company failed to adequately inform consumers and obtain their consent before collecting and using their data for advertising and marketing.
The FTC called some of the places the company placed people, such as places of worship or receiving medical treatment, “particularly sensitive areas.”
InMarket collected data from two primary sources.
First, the company integrated a location-gathering software development kit (SDK) into two of its apps, which have been downloaded to more than 30 million devices. CheckPoints is a shopping rewards app and ListEase is a shopping list app.
According to the FTC, InMarket informed users that their data would be used to provide them with shopping reward points and remind them about items on their shopping lists, while location data was combined with other data about users to target them. The company said it did not notify them that it would be used for advertising.
Additionally, InMarket has made the SDK available to over 300 third-party apps that have been downloaded to over 390 million devices. App developers received a portion of advertising revenue from each ad served. The FTC cited examples in which a person within 200 meters of a pharmacy saw an advertisement for toothpaste, cold medicine, or a similar product.
No free license to monetize consumer location information
In some cases, InMarket has made advertising audience segments available through a bidding process. Advertisers can select specific audiences and specify how much they want to pay each time an ad is delivered to the mobile devices of users who fit their profile.
The FTC alleges that InMarket failed to ensure that third-party apps incorporating its SDK had the necessary consent from users.
Finally, it said InMarket's practice of retaining geolocation data for five years was unnecessary for the purposes for which it was collected. Holding it for too long increases the risk of it being misused and tied to individual consumers.
“Too often, Americans are tracked by serial data custodians who endlessly siphon off and use their personal information,” said FTC Chair Lina Khan.
Today's FTC action makes it clear that companies do not have a free license to monetize data that tracks people's precise locations. ”
Please read the privacy notice before using the app
This is the second recent lawsuit filed by the FTC against data aggregators.
X-Mode Social and its successor Outlogic settle charges that the company sold data that could be used to track people's visits to medical and reproductive health clinics, places of worship and domestic violence shelters did.
InMarket has agreed to stop selling or licensing precise location data and to destroy previously collected data unless the consumer consents to its use or the data is anonymized.
When you use an app, look for a privacy notice that briefly explains what information the app collects, how it is used, whether it is shared with third parties, and how it is used.
Please be aware that despite company promises and privacy policies, sharing sensitive information always carries the risk of misuse. Are the app's services worth the risk?
Randy Hutchinson is president and CEO of the Mid-South Better Business Bureau.