FTC Issues Warning to Application Developers

By Zuzana S. Ikels

A few days ago, the Federal Trade Commission issued warning letters to 12 application developers because the apps use the software, Silverpush.   According to the FTC, Silverpush is designed to monitor a user’s television use regardless of whether the user is actively using the particular app, enabling it to provide a detailed record of the consumer’s' television use for the purpose of marketing analytics and targeted advertising. The FTC instructed the app developers to notify consumers if the software is being used in the U.S., which Silverpush claims it is not. 

The 12 app developers allegedly ask the end-user for permission to use the device's microphone, even though the app does not have a need for that functionality.  The FTC appeared to conclude that the only reason the apps had this feature was to monitor and collect information.  If the app developers' statements state or imply that the apps aren't collecting and transmitting TV viewing data when in fact they do, the FTC letter warned that such practices could violate Section 5 of the FTC Act.  It concluded by reminding the App Developers that they are encouraged to follow the FTC's guidelines on marketing.

The FTC’s focus on app developers is an interesting juxtaposition to a recent Eleventh Circuit decision, which held that the content provider could not hold a company liable for tracking the viewing habits through third party software, because the TV app was free and there was no direct, customer relationship with the company. The warning does not appear to delineate between the different type of app platforms that are available.   Although the letter focuses on app developers, the warnings are important to consider regardless of whether you are a developer or the owner/content provider.    Companies, regardless of whether they are the developer or owner of the platform, should conduct an ongoing evaluation of their disclosures and warranties of the collection and marketing practices related to Apps, both with respect to their own privacy policy as well as the policies of third parties with which they work, to ensure that there is a consistent and compliant approach.  Likewise, the contracts and licenses between the app owners and developers should delineate the disclosure and warranty obligations regarding these marketing practices.  

If you or your company have questions or concerns, contact the author or a Polsinelli Privacy and Data Security team member.