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Written by: Mike Yang

UPDATED–The FTC has reached a $4 million settlement with a mobile ad firm that the commission says was tracking mobile device users–including kids–without their consent.
The case centers on an ad network run by InMobi, a company with offices around the world, which the FTC alleges was tracking users of thousands of mobile apps, even when users had opted out. The network reaches more than a billion devices, and the FTC says InMobi used the information that it collected from consumers to build a large database of information on location. That data then was combined with information on the wireless networks that users were near to pinpoint users’ physical locations, the complaint says.
“InMobi tracked the locations of hundreds of millions of consumers, including children, without their consent, in many cases totally ignoring consumers’ express privacy preferences,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection. “This settlement ensures that InMobi will honor consumers’ privacy choices in the future, and will be held accountable for keeping their privacy promises.”
The FTC’s complaint alleges that InMobi violated the Children’s Online Privacy Protection Rule (COPPA) by collecting location and other information from apps aimed at children, after promising not to do so.
“The complaint noted that InMobi’s software tracked location in thousands of child-directed apps with hundreds of millions of users without following the steps required by COPPA to get a parent or guardian’s consent to collect and use a child’s personal information,” the FTC said.
As part of the settlement, InMobi, which didn’t admit any wrongdoing, will have most of the fine suspended, paying just $950,000 because of the company’s financial condition. InMobi also has to institute a comprehensive privacy program and is prohibited from collecting users’ location information without users’ express consent.
In a statement, InMobi officials said that the COPPA violations were the result of a technical error by the company, and not intentional.
“With best intentions to adhere to COPPA requirements, InMobi implemented a process to exclude any publisher’s site or app identified as a COPPA app from interest-based, behavioral advertising. During the investigation by FTC, InMobi discovered that there was a technical error at InMobi’s end that led to the process not being correctly implemented in all cases. As a result, some COPPA sites were served with interest-based campaigns on the InMobi Network. InMobi promptly notified the FTC of this issue as soon as it was discovered and has made it clear from the outset that this was by no way means deliberate,” the company said in a statement.
Mobile tracking, especially through ad networks, is a highly sensitive topic and the FTC has been paying close attention to the way that companies handle it. Many consumers understand that the apps they’re using on a daily basis are capable of tracking the activities online, but the fact that they also can track users’ movements is not as well-known. Advertisers have a vested interest in knowing where their target consumers are at any given time in order to show them contextual ads and offers. Mobile devices are the perfect platform for location tracking, as most users carry their phones with them nearly all the time.
Some advertisers have even taken their efforts to other platforms, using inaudible sounds embedded in ads to track users across multiple devices. The FTC recently warned app developers about this behavior.
This story was updated on June 23 to add the statement from InMobi.