FTC issues shopping app guidance

5 August 2014

WASHINGTON DC: Mobile shopping app vendors need to improve the information they provide for consumers, particularly concerning data privacy, security and dispute procedures, the US Federal Trade Commission (FTC) has warned.

As part of its ongoing work to bolster consumer protection in the US, the FTC conducted a review of 121 different shopping apps across the Google Play and Apple App Stores.

These included 47 price comparison apps, 45 in-store purchase apps, and 50 "deal" apps, which offer coupons or discounts. Several apps covered more than one category.

After analysing the apps for their clarity of language and the effectiveness of their measures to protect consumers, the FTC made three key recommendations.

Concerning consumers' rights and liability limits for unauthorised, fraudulent, or erroneous transactions, the FTC said developers of in-store purchase apps should provide clear dispute resolution and liability limits information.

This is particularly important for the stored-value - card - method of processing payments, the FTC said, because these transactions may lack the legal protections offered by credit or debit cards.

Secondly, the FTC said apps should be much more open about how they collect, use, and share consumer data after finding some of them used "vague" language.

While nearly all of the surveyed apps stated that they share personal data, some of them reserved the right to share users' personal data without restriction.

This applied to a third (33%) of in-store purchase apps, 29% of price comparison apps, and 17% of deal apps, leading the FTC to warn that this made it difficult for consumers to make informed decisions about how their personal data is used.

Finally, the FTC also urged app companies to improve their data security protections and to follow through on their promises about safeguarding consumers' data.

"As mobile apps become more central to the shopping experience, it's important that consumers have meaningful information about how those apps work before they download them," said Jessica Rich, director of the FTC's Bureau of Consumer Protection.

"Consumers should not be left in the dark about their potential liability for erroneous or unauthorised charges or about the way shopping apps handle their data," she added.

Data sourced from Federal Trade Commission; additional content by Warc