FTC Announces Enforcement Action Seeking to Restrict Company’s Collection and Use of Data From Online Advertising Auctions

On December 3, 2024, the U.S. Federal Trade Commission (FTC) announced an enforcement action seeking to restrict a Georgia-based company’s collection, use, and disclosure of certain consumer location data from online advertising auctions. In its complaint, the FTC alleges that data broker Mobilewalla, Inc. (Mobilewalla) collected and sold consumers’ sensitive location data without their consent for purposes of, among other things, targeted advertising. As part of the FTC’s proposed settlement order, Mobilewalla will be banned from collecting consumer data from online advertising auctions for any purpose other than participating in those auctions.

In online advertising auctions, various digital mediums such as websites or apps can auction off their empty ad space to advertisers in a process called “real-time bidding” (RTB). Each auction broadcasts certain consumer data points such as location data or consumer characteristics to inform bidders of the consumers who would potentially be the target of the ad. These consumer data points are shared with dozens of bidders, even though only the winning bidder can use those data points for the purpose of targeted advertising.

In its complaint, the FTC alleges that Mobilewalla collected through advertising auctions and sold to third parties sensitive consumer data — including location data identifying consumers’ visits to health clinics and places of worship — for the purpose of targeted advertising. In addition, Mobilewalla allegedly created a “geo-fence” around the home addresses of certain healthcare center employees to enable its clients to “poach these nurses from these centers to a competitor.” Mobilewalla allegedly also experimented with other non-advertising uses of consumers’ information, such as attempting to geo-fence a work location to track where union organizers travel.

This action marks the first time that the FTC has claimed that the collection of consumer data from online advertising auctions for purposes other than participating in those auctions constitutes an unfair or deceptive practice in violation of the FTC Act. Under the proposed settlement order, in addition to being banned from any such data collection, Mobilewalla will be required to establish (1) a program to prevent the use, sale, or disclosure of sensitive location data; (2) a method for consumers to request the company’s deletion of their location data; (3) procedures to confirm whether consumers have provided consent for the collection and use of location data; and (4) a method for consumers to withdraw consent for the collection and/or use of their data.

The FTC’s action against Mobilewalla serves as a warning to businesses that engage in online advertising, particularly through RTB. For companies that rely on data brokers for RTB and other services, the FTC action underscores the importance of due diligence regarding a broker’s privacy compliance and related consumer protection measures.

The authors of this blog post and their colleagues in the Arnold & Porter Privacy, Cybersecurity & Data Strategy practice group are available to provide counsel on the FTC’s actions in this area, enforcement brought by the FTC and other regulators, and more broadly on privacy and security compliance.

© Arnold & Porter Kaye Scholer LLP 2024 All Rights Reserved. This Blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.