Spies in your mobile phone

Heather Green
19 Jan 2009

Just as advertisers and wireless companies are hoping for the business of marketing on mobile phones to take off, consumer groups are raising pointed questions about the business practices of these companies. On Jan. 13, the Center for Digital Democracy (CDD) and the U.S. Public Interest Research Group (PIRG) filed a complaint with the Federal Trade Commission charging that wireless ad companies need to disclose more to their customers about what data are being collected about them and how those data are being used.

Mobile phones can provide a gold mine of data to marketers. The devices can pinpoint where a person is at any given time and trace any travels during the day. Mobile phones can also relay what kinds of restaurants a person looks for on her phone or which headlines are being read. 'You're talking about a device that can identify an individual,' says Jeff Chester, executive director of the CDD, a nonprofit group based in Washington. 'It's carried with you wherever you go and raises the stakes in terms of consumer protection in the digital era.'

Wireless marketers do have voluntary guidelines that require them to get a customer's consent"”called 'opt in'"”before collecting data about them. In addition, the Federal Communications Commission ordered mobile marketers in 2007 to get opt-in consent from customers before carriers release information they collect to marketers. But the consumer groups argue that these permission clauses can be buried in the fine print of contracts that customers agree to when they sign up to get, for example, sports updates on their phones. Consumers may not understand that they're agreeing to hand over data about their tastes and location, and that the data information may be used for marketing. The consumer groups want these disclosures to be much more explicit, and they want the FTC to help consumers understand"”through, say, public service campaigns"”how targeting technologies can use the geographic location information gathered by marketers.

Consumers can complain

Mike Wehrs is president of the Mobile Marketing Assn., the trade group that includes AT&T (T), Verizon (VZ), Vodafone (VOD), AOL (TWX), and Yahoo! (YHOO). He says the industry has taken proactive steps to protect privacy, such as creating consumer best-practices guidelines. Still, he agrees that as mobile marketing gets more sophisticated, the industry needs to do more. That's why the MMA is already discussing putting new programs for addressing privacy concerns and providing more disclosure, Wehrs says.

These include a complaint system that consumers will be able to use to report what they consider to be privacy violations. Standardized privacy guidelines would provide shorthand guides to different privacy policies. For example, when someone signs up to get weather updates, he might see a pop-up saying that the service uses Mobile Privacy Policy 1. A search online could show that that policy entails sharing location information. 'We've behaved responsibly, and we've tried to create a level of openness that consumers are comfortable with. There are an additional set of steps that we need to go forward with,' Wehrs says.

The 52-page complaint filed by the consumer groups outlines ways mobile marketers collect information. Marketers can gather location data from a service that uses a global positioning system to help people stay in touch with their friends. Advertisers can collect behavioral or contextual information, such as social networks people visit or movie review services they use. Ad networks can compile gender and income provided by publishing partners or outside data partners such as Acxiom (ACXM), which projects income and education levels by analyzing Zip Codes.

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