WASHINGTON - The government is investigating whether software companies that make cellphone apps have violated the privacy rights of children by quietly collecting personal information from phones and sharing it with advertisers and data brokers, the Federal Trade Commission said Monday. Such apps can capture a child's physical location, phone numbers of their friends and more.
The FTC described the marketplace for mobile applications - dominated by online stores operated by Apple and Google - as a digital danger zone with inadequate oversight. In a report by the FTC's own experts, it said the industry has grown rapidly but failed to ensure the privacy of young consumers is adequately protected. The FTC did not say which or how many companies it was investigating.
Among 400 apps designed for kids examined by the FTC, most failed to inform parents about the types of data the app could gather and who could access it, the report said. Others apps contained advertising that most parents would find objectionable or included links to Facebook, Twitter and other social media services where kids post information about themselves.
The report said mobile apps can siphon data to "invisible and unknown" third parties that could be used to develop a detailed profile of a child without a parent's knowledge or consent.
"It's not hypothetical that this information was shared," said Jessica Rich, associate director of the FTC's financial practices division.
The FTC also said it was investigating whether any of the apps developers engaged in unfair or deceptive trade practices, which would be illegal.
In one case mentioned in the report, an app that allows children to paint pictures and save them in an online photo gallery didn't indicate that it includes advertising. But investigators said the app ran an ad across the bottom of the screen for an online dating service that said, "See 1000+ Singles."
The FTC would not identify any companies it was investigating until a complaint is filed, Rich said. She said the agency expects the report will "light a fire" under the industry.
"We're not naming names, in part because we think this is a systematic problem, and we don't want people to think that if they avoid certain apps that they're home free," Rich said.
The commission is considering major changes to a 1998 law, the Children's Online Privacy Protection Act, that would impose tougher online safeguards for children under 13. Technology companies have warned that the proposed changes are too aggressive and could discourage them from producing kid-friendly content on the Internet. But public interest groups have pushed hard for the changes, saying expanded use of mobile devices and methods for collecting personal data have outpaced rules put in place more than a decade ago.