Electronic Retailer - November 2011 - 12

INDUSTRY REPORTS

FTC Forum

Truth in App-vertising
BY LESLEY FAIR You and your customers are making the move to the mobile marketplace. Just remember that wherever you go, consumer protection laws will be right there to greet you. Three law enforcement actions recently filed by the Federal Trade Commission (FTC) establish that truth-in-advertising and privacy protection principles apply in the marketing of smartphone applications. If your company’s gone mobile, it’s smart to make sure your smartphone apps comply with the law. The FTC’s settlement with apps developer and distributor W3 Innovations – doing business as Broken Thumbs Apps – makes it clear that the protections of the Children’s Online Privacy Protection Act (COPPA) apply in the apps arena. Several of the company’s apps, including the Emily’s Girl World, Emily’s Dress Up & Shop, and Emily’s Runway High Fashion apps, were geared toward children and marketed in the GamesKids section of Apple’s App Store. With more than 50,000 downloads,

What about the growing market for health-related apps? The same standards for scientific substantiation apply on the small screen, says the FTC.
the apps allowed kids to play games, create virtual models and design outfits. They could even use the app to email Emily’s Blog with shouts-outs to friends or requests for advice. The problem, according to the FTC, was that the company collected and maintained thousands of email addresses from users of the Emily apps without giving notice of their information collection practices and without getting verifiable parental consent. That, says the FTC, violated the COPPA Rule, which requires parental notice and consent before companies collect kids’ personal information online, whether through a website or a mobile app. In addition to a civil penalty, the settlement – which names both the company and its president – bars future COPPA violations and requires them to delete all kids’ personal information collected in violation of the Rule. What about the growing market for health-related apps? The same standards for scientific substantiation apply on the small screen, says the FTC. In two unrelated settlements, the FTC challenged claims that lights emitted from smartphone apps were effective at treating acne. “Kill ACNE with this simple, yet powerful tool,” promised the marketer of Acne Pwner. Ads for Acne App claimed that its blemish-fighting powers were scientifically proven: “A study published by the British Journal of Dermatology showed blue and red light treatments eliminated p-acne bacteria (a major cause of acne) and reduces skin blemishes by 76%.” The FTC charged that the companies didn’t have scientific proof to back up their promises and that the study cited in Acne App’s ad didn’t support its claims. Settlements resulted in financial disgorgement and tough injunctive provisions against the companies and corporate officers. Thinking about integrating smartphones into your marketing strategy? The smart money’s on companies that care about compliance. To find out more, visit business.ftc.gov. Lesley Fair is an attorney with the FTC’s Bureau of Consumer Protection.

electronicRETAILER | November 2011

Electronic Retailer - November 2011

Table of Contents for the Digital Edition of Electronic Retailer - November 2011