Survey says: What FTC follow-up report on kids' apps means for your business

Next time you’re in a long line at the grocery store, watch how parents distract a kid who's feeling cranky.  They used to jangle keys or offer a favorite toy.  But now a lot of Moms and Dads hand them a smartphone with an app designed for children.  As the kids' app market continues to grow, FTC staff issued a report detailing survey results showing that neither app stores nor app developers were giving parents the information they need to figure out what data is being collected from their kids, how it’s shared, and who has access to it.  The report recommended that members of the app industry give Moms and Dads the information they need.

But new survey results outlined in a just released follow-up staff report, Mobile Apps for Kids:  Disclosures Still Not Making the Grade, suggest that not much progress has been made.  The latest survey used the same methodology as the first one, but went a step further.  In addition to looking at the apps’ disclosures, this time the staff downloaded the apps and tested them to see how their actual practices squared up with their disclosures.

The follow-up report boils it down to this:

"Most apps failed to provide any information about the data collected through the app, let alone the type of data collected, the purpose of the collection, and who would obtain access to the data.   Even more troubling, the results showed that many of the apps shared certain information with third parties — such as device ID, geolocation, or phone number — without disclosing that fact to parents.  Further, a number of apps contained interactive features – such as advertising, the ability to make in-app purchases, and links to social media — without disclosing these features to parents prior to download."

 Here are some specifics about what the survey says:

• Only 20% of the apps in the survey disclosed any information about privacy practices.
• Nearly 60% of the apps send data from the device back to the app developer or, more commonly, to an ad network or analytics company.  The most common information was a user’s device ID, a string of letters or numbers that uniquely identifies each mobile device.  Some apps shared a user’s precise geolocation or phone number.
• What are parents told before downloading an app?  About 58% of the apps in the survey contained in-app ads, but only 15% disclosed that before downloading.  22% contained links to social networking services, but only 9% disclosed that fact.  17% let kids buy virtual goods within the app, with prices ranging from about a buck to as much as $30.  Although the two major app stores offer certain indicators when an app has in-app purchasing capabilities, that information isn’t always prominent and can be hard for many parents to understand. 

One overarching concern:  A relatively small number of companies receive information from a large number of apps.  This means those companies could potentially develop detailed profiles of kids based on their use across different apps.

What’s the message for industry?  Everyone — app stores, app developers, and companies providing services within apps — should speed up the effort to put best practices in place to protect kids’ privacy and to give key information to parents before they download apps for their kids.  The report also urges industry members to implement the recommendations in the FTC Privacy Report — for example, incorporating privacy protections into the design of mobile products, giving parents easy-to-understand choices about what apps do with kids’ information, and being transparent about how data is collected, used, and shared through kids’ apps.  One resource if apps are your business:  Marketing Your Mobile App: Get It Right from the Start.

FTC staff will be available at 1:00 PM ET on Monday, December 10, 2012, to take questions on Twitter.  Follow @FTC and join the conversation using the hashtag #FTCpriv.

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