FTC Report: Companies Should Explain Terms of Service Pre-Download | Adweek FTC Report: Companies Should Explain Terms of Service Pre-Download | Adweek
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Do Mobile Shopping Apps Dupe Consumers?

FTC says they should explain data use, privacy

Photo: Getty Images

It’s "caveat emptor" in the app store, according to the Federal Trade Commission.

The U.S. consumer watchdog agency said that while most mobile shopping apps make it easy for consumers to buy stuff, they make it difficult for consumers to understand what happens with their personal data or credit card information afterward.

Mediapost highlighted the new report, which is critical of mobile shopping policies.

More than 120 shopping apps from both Google Play and the Apple App Store were surveyed in the report, “What’s the Deal? An FTC Study on Mobile Shopping Apps.” They were divided almost evenly among price comparison apps, coupon apps and retailer in-store purchase apps.

Where terms of service did explain policies on the collection and use of data, as well as the potential liability to consumers in the event of a payment dispute, the FTC claimed this information tended to be vague at best. About a third of the apps surveyed reserved the right to share personal data without any restriction at all, according to the report.

The public was advised by the FTC "to closely examine the apps’ stated policies on issues like dispute resolution and liability limits, as well as privacy and data security and evaluate them in choosing which apps to use."

But the report’s main recommendations were aimed at companies that make mobile shopping apps, urging them to explain their terms of service more clearly to consumers before they download and use them.

While app-based shopping is driving more revenues for brands, it’s also becoming a hot-button issue at the FTC. The consumer protection agency put Apple on the hook for $32.5 million earlier this year for unauthorized in-app purchases by children and is now going after Amazon for the same issue.

In a May interview with Adweek, FTC Chair Edith Ramirez put tech companies on notice to take their communications with consumers seriously: “Until a comprehensive privacy law is enacted, we will continue to vigorously enforce the FTC Act’s prohibition on deceptive or unfair commercial privacy practices."

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