The FTC's $950,000 InMobi Decision: What it Means for the Rest of Us

The FTC's $950,000 InMobi Decision: What it Means for the Rest of Us

Posted by Mogean | August 11, 2016 | Innovation

The Federal Trade Commission (FTC) spoke and the industry listened when the body handed down a ruling against mobile advertising company InMobi in June 2016. InMobi, who had been accused of violating customer privacy and employing disreputable location-data collection practices, was fined $950,000 and ordered to modify its practices moving forward.

Given InMobi’s dominant position within the industry, this ruling could impact a large number of businesses. InMobi was, at least up to this point, a popular choice for companies seeking customer location data. According to InMobi, its technology is used on over 1.5 billion unique mobile devices, a massive number that is a testament to its place of power within the market. News of the recent ruling potentially exposes a host of other data-collection companies to increased scrutiny and could impact consumers’ views of location services in the future. “Currently, 60 to 70 percent of people opt in to tracking services because of the benefits,” states Mogean Chief Revenue Officer and Co-founder Nate Halsey. But if consumers begin to feel like their data is being abused, this trend could turn in the other direction.

The rules

The rules regarding data collection are clear, so avoiding infringement should be simple, right? Not quite. As Halsey points out, this industry has, up to this point, been largely self-regulated. InMobi created a problem for itself and its clients by breaking the industry’s self-imposed rules.

Specifically, InMobi failed to inform consumers of their rights to opt out of WiFi tracking. The company also did not provide a way for them to opt out of this specific type of tracking. The company then collected location data, both directly and indirectly, from users who had not given express consent to be tracked, had opted out of GPS tracking or had turned off mobile tracking services. The potential issues with these data collection practices caused the FTC to step in, a move that will impact future developments within the sector.

“This is the very first time when someone got his or her hand slapped,” states Halsey, “So I expect there to be a lot more opportunity for this new precedent to be applied across the industry, specifically to AdTechnology.”

The dangers

Given the power associated with both the use and misuse of data, there are legitimate dangers to customers, as well as to data creation and collection firms, if companies violate the guidelines that govern this practice.

The danger is perhaps most acute for customers. When companies gather data unethically, it puts consumer privacy—and trust—at risk. This is clearly illustrated in the case of InMobi, as the design of its system allowed for the tracking of customers who did not know they were being tracked or had every reason to believe that they were not being tracked—a portion of these users being children.

Companies that operate in this sector have reason to worry about rulings like this as well. Ultimately, if organizations within the field continue to use unethical and dangerous practices, the federal government will be inclined to take an increasing role, more strictly regulating the industry. And more rigorous statutes will make it harder for even the most well-meaning of companies to do what they do best. Strict rulings could potentially tie their hands and limit their abilities to employ some popular location data-collection practices.

The future

What will the InMobi ruling mean for the future of data collection and creation? The answer remains unclear. But industry leaders are keeping close tabs, including Halsey who says that he will be paying close attention to this precedent-setting case.

In the present uncertainty, one thing is without question: the InMobi ruling will change the way the industry is governed. As Halsey says, “The Wild West is about to get a little more organized.”

In the wake of the FTC’s decision, businesses everywhere need to take notice and remain vigilant, modifying both their data-creation procedures and their user agreements to make sure they, too, don’t find themselves facing the same financially crippling fate as InMobi.

At Mogean, we make customer privacy paramount, taking measures to protect both clients and ourselves from privacy violations—even, to the fullest extent possible, accidental ones. While we value data, we value people even more.
With this in mind, we want to give consumers the opportunity to determine just how much data they want to share. When we partner with a client, we always evaluate their end user terms and license agreement to make sure that both are compliant. In addition, we help our clients assess whether their companies are collecting data safely, fairly and in a manner that is both ethically and legally sound.

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