Two privacy groups on Tuesday asked the U.S. Federal Trade Commission to regulate how mobile marketers can use consumers' personal information, saying many people don't know when their information is being collected from cell phones and how it's being used.
The mobile industry responded that it already offers enough consumer protection through self-regulation, and one analyst said it is doing a good enough job that government intervention isn't necessary.
In their filing, the Center for Digital Democracy and the U.S. Public Interest Research Group asked the FTC to expand an existing inquiry into online interactive marketing to include mobile marketing.
They said the FTC should identify practices that compromise privacy and consumer welfare; examine opt-in procedures to make sure consumers are aware of what data they are giving up and how it will be used; investigate marketing tactics that target children and "multicultural communities," and create policies to halt abusive practices.
The filing acknowledges the industry's effort to police itself but says it does not go far enough. "Current self-regulatory privacy and marketing policies in the mobile arena are inadequate," the groups said. They also criticized the mobile advertising industry for creating its regulations without meaningful participation from consumers or consumer protection agencies like the FTC.
One of the major concerns is that mobile-phone customers don't know what they're agreeing to when they allow mobile operators to provide them targeted advertising, said Jeffrey Chester, executive director of the Center for Digital Democracy. Customers may not know that their personal data is being "retained, put in a profile and potentially shared" with other companies, Chester said.
The filing cites three examples of mobile marketers including Admob, Bango and Marchex that the privacy groups say collect information from mobile users without adequate notice.
While many companies ask customers for their approval to be part of marketing campaigns, those customers may not take the time to scroll through all the information on "tiny little screens," Chester said. "They don't know what they're getting into."
Mobile marketers and some other experts, however, argued that self-regulation is working. The industry has done a good job of protecting user privacy and probably doesn't need government regulations, said Greg Sterling, an analyst with Sterling Market Intelligence. Mobile operators have been cautious, "some argue overly cautious," about protecting consumer privacy, he said.
All of the operators in the U.S. are part of the Mobile Marketing Association, said Mike Wehrs, president and CEO of the group, which sets best practices for mobile marketers and investigates complaints from consumers. He defended the group's track record and said some of the allegations in the FTC filing are untrue. For example, consumers are welcome to offer input on how mobile marketing works, and anyone is invited to the MMA's open meetings, he said.
In addition, the MMA voluntarily briefs the FTC every six months, keeping it informed about changes in the industry and how the MMA is keeping pace, he said. If a government agency starts setting mobile advertising policy, it probably would struggle to make changes as quickly as an independent group like the MMA, he argued.
Wehrs and Sterling both contended that the advertising industry would not want to abuse the trust of consumers because their businesses depend on them. "This is a case where consumers' interests and the interests of the marketing company are relatively aligned, in the sense that if you get a lot of spam, people will be angry and the marketing company will be unsuccessful," Sterling said.
Google, whose mobile practices are referenced repeatedly in the FTC filing, said it is "keenly aware" of its responsibility to protect user privacy. "Whether it's for a desktop or for a mobile platform or device, we design products that give users meaningful choices about how they use our services and what information they provide to us, and let users know when products may collect personally identifiable information. ... We want to work with industry on developing best practices on privacy and we welcome all efforts to do that," the company said in a statement.
Still, given that the U.S. may be leaning toward a more regulatory environment, in the shadow of a financial crisis that many blame on a lack of regulation, the FTC will likely consider launching an investigation, Sterling said. He expects the FTC to at least hold hearings about mobile marketing, and potentially call for new guidelines. But he doesn't expect the FTC to create any sort of stringent regulatory system.