A year ago Path's app for iPhone received a lot of criticism because it was discovered that the app was accessing users' contacts without permission. The developers quickly made things right and released an update to fix the permissions. However, the FTC caught them anyways and fined them for violating the Children's Online Privacy Protection Act (since some users were under 13).
Path has agreed to settle with the FTC and pay an $800,000 fine for “allegedly collecting kids’ personal information without their parents’ consent.” In addition to the fine, Path is implementing a “comprehensive privacy program,” which includes a requirement that it conduct privacy assessments from third-party sources every other year for the next 20 years.
In the complaint, the FTC said that the user interface of Path’s iOS app was misleading and provided consumers no choice regarding how their personal information was collected. The app had the ability to find friends using the users' contacts, but the app didn't address that it would be accessing contacts in order to do so.
May this be a lesson for Path and other developers who walk the line of privacy issues. While an $800,000 fine would basically be pocket change for Facebook or Google, that amount of money for a startup isn't anything to scoff at, and we're sure that Path will be walking on egg shells for awhile from this point forward.
UPDATE: Path has posted up a response about the FTC settlement.
[via The Next Web]