Feds find fault with mobile shopping apps

A new report from the Federal Trade Commission warns that shopping apps fail to provide important information to consumers before download about privacy and security policies.

“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,” Jessica Rich, director of the FTC’s Bureau of Consumer Protection, said in a statement.

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The report said that mobile shopping apps — which can collect financial information — should more clearly explain to users how they collect, protect and share user data and what happens if users want to dispute charges made through the app.

“Consumers should be able to make informed decisions about the apps they install and the services they use,” the report said.

“In addition to being able to understand their rights and protections in case something goes wrong with a transaction, consumers should also be able to evaluate apps’ data practices before signing up to use a particular service.”

The report focused on the top shopping apps in the Google and Apple Stores that allow users to compare prices, redeem coupons and pay in-store with their phone.

“Based on its review, staff found that the apps studied often failed to provide pre-download information on issues that are important to consumers,” including how the app collects and shares data and whether a user is liable for unauthorized purchases made with the app.

The agency report recommends that prior to download apps tell users their “rights and liability limits for unauthorized, fraudulent, or erroneous transactions.”

Apps should also be upfront about their privacy and data security practices, the report said.

“While almost all of the apps that staff reviewed had privacy policies purporting to address how they handle consumer data, these policies often used vague terms, reserving broad rights to collect, use, and share consumer data without explaining how the apps actually handle consumers’ information,” the report says.

The report also recommended that users look for information about policies regarding data privacy and liabilities for unauthorized charges before they download the apps and warned users against paying with prepaid cards, which do not have federal limited liability protections.