Deceptive Diversions: Kid apps secretly sharing info without consent

The FTC doesn't have a child privacy law regulating mobile apps

Gaming apps for kids seem innocent enough, but what information can they access and share?

A survey of 400 apps conducted by the FTC reveals 80 percent did not disclose any information about their privacy practices and more than half sent personal data like geolocation, contacts and phone numbers to third parties--all without parental consent.

How are app developers getting away with this? For one, the FTC doesn't have a child privacy law regulating mobile apps. In fact, the last time the agency passed a law protecting minors online was 1998--the Children's Online Privacy Protection Rule.

"They will enforce the Federal Trade Commission Act if you engage in deceptive practices, but not unfair practices. In other words, if I don't have a privacy policy and I make it clear I'm not going to protect your privacy, I'm safe. They have nothing to go after me," said Llew Gibbon, University of Toledo law professor.

One app feature particularly concerning to the FTC are "in-app purchases," which allow children to buy virtual rewards with real money inside the game. Unless a parent disables in-app purchases in the settings of their device, a child could rack up thousands of dollars in bills without realizing the consequences.

The FTC's report shows 19 percent of the apps surveyed contained in-app purchase features.

But the days of lax privacy policies may soon be over. Just this month, the FTC slapped the developers of an app called "Path" with an $800,000 fine for illegally collecting children's information without parental consent, according to PC World. The agency has also released guidelines for developers to increase the transparency of their privacy policies. The report isn't law, but Path should serve as an example to app creators who haven't updated their terms of service.

Right now, the only sure way to prevent apps from compromising children's privacy is by managing what they are downloading. The video below this story gives a step-by-step visual for how to disable in-app purchases in your iOS and Android devices, and how to manage what apps kids can access by setting a passcode.

Verizon Wireless representative Steve Johnston also recommends parents check out A Platform For Good and to get educated about their device and find out which apps are rated "safe" for kids.

You can also set up an appointment with a representative from your mobile carrier to help you set parental controls and learn more about your child's device.

"The best thing I tell customers if theyâ??re coming in and saying, 'hey I have all these apps and I donâ??t know what they are or how they work' is to actually go through and compare them with Verizon. You can rank the applications--if theyâ??re good, if there are concerns out there--so they can sort through them," Johnston said.