FTC sues InMobi for violating users' privacy

Earlier known as mKhoj, InMobi started as an SMS-based search platform with initial funding from Mumbai Angels.

In 2007, the company switched to a more scalable business model - mobile advertising.

The adtech start-up ties up with apps in order to receive access to user information.

Using the information obtained, InMobi helps companies to send out more relevant ads.

The Federal Trade Commission (FTC) was established in 1914 under the Federal Trade Commission Act and is an independent agency of the United States Government.

The Bureau of Consumer protection under FTC shields consumers against deceptive practices in commerce.

Areas of principal concerns for this bureau are: advertising and marketing, financial products and practices, telemarketing fraud, privacy and identity protection etc.

The US Federal Trade Commission, filed a complaint against InMobi for obtaining location data from cellphone users' without their consent.

InMobi will have to pay a $950,000 fine for the same.

Jessica Rich, director of FTC's Bureau of Consumer Protection, said, "InMobi tracked the locations of millions of consumers, including children, without their consent, in many cases totally ignoring consumers' express privacy preferences".

The statement issued by FTC alleged that InMobi built a database by collecting location information from consumers that allowed access to it.

They then merged that data with wireless networks surrounding the consumers to retrieve the physical location of those wireless networks itself.

This database was used to gather the physical location of consumers based on the wireless networks they were near, irrespective of location settings.

Apart from the $950K fine, InMobi will exclude publisher's sites and apps identified as COPPA apps from interest-based, behavioural advertising.

It promised not to geolocate users' devices without seeking prior permission.

The settlement requires InMobi to set up a comprehensive privacy programme that will be independently audited every 2 years for the next 20 years.

Failing to follow the above-stated terms will make InMobi liable to pay civil-penalty worth $4m.