FTC Fines Company $800kWritten by Michael Levanduski
February 4, 2013 # 8:52 am # Industry News, Legal Challenges, Specials # 3 Comments
One of the most well-known abbreviations thrown around the web among digital marketers and online businesses is FTC. It seems that almost daily there is a new legal case between some company and the FTC, and the commission more often than not seems to come out on the better side of things. Such is the case with the recent legal suit between the FTC and Path, a social networking app that has been around since late 2010. It’s a social network that allows users to share their everyday lives with their friends, much like most of the other popular networks today. Also like these other networks, Path has recently run into some trouble with the FTC regarding their adhering to privacy guidelines. Apparently, according to Ad Age, Path has agreed to a settlement of $800,000 with the FTC, but this case has led to something new that will pertain to all mobile app developers, and furthermore mobile app marketers.
The settlement between the FTC and Path all began because the social network was alleged to have collected the personal information of children without the consent of a parent or guardian. As a social network, Path functions through their Path 2.0 app, in which is an Add Friends feature that is the cause for the debacle. With the feature, users have three options for adding friends: from phone contacts, from Facebook, or inviting friends through email or SMS. According to Ad Age, the company was collecting information such as first and last names, phone numbers, addresses, email addresses, and account names for other social networks from users’ contacts, despite these users having not opted to find friends through their contact lists. To top it off, the network lied to users by telling them that the only information that they collected included things like IP addresses and operating systems.
They collected this information from 3,000 users on their social network that were under that age of 13 years old. This is where they messed up big time. By doing this, Path had violated the Children’s Online Privacy Protection Act. Ad Age reports, “As part of the settlement, Path has agreed to privacy audits for the next 20 years and to establish a privacy program.”
With this legal settlement, the FTC released some guidelines for app developers to follow to better deal with security in developing mobile applications. This was obviously an effort to try to get rid of cases like these, where social users so clearly have their privacy violated.
In the company’s About page, they list a few of their core product features, a few of which are below. Clearly, they aren’t following their own rules.
Path is private by default. You are always in control of your moments and who can see them.
Your Path is securely stored in the Path cloud using world class technology and techniques.
Also, Path has since released an apology, stating that they are doing all they can to make the changes necessary to avoid the issue in the future. Here is part of that apology, as reported by Ad Age;
As you may know, we ask users’ their birthdays during the process of creating an account. However, there was a period of time where our system was not automatically rejecting people who indicated that they were under 13. Before the FTC reached out to us, we discovered and fixed this sign-up process qualification, and took further action by suspending any under age accounts that had mistakenly been allowed to be created.