X-Mode Prohibited from Selling Phone Location Data by FTC, and Required to Erase Gathered Information

The U.S. Federal Trade Commission has banned the data broker X-Mode Social from sharing or selling users’ sensitive location data, the federal regulator said Tuesday. The settlement will also require the data broker to delete or destroy all the location data it previously collected, along with any products produced from this data, unless the company obtains consumer consent or ensures the data has been de-identified. X-Mode buys and sells access to the location data collected from ordinary phone apps. While just one of many organizations in the multibillion-dollar data broker industry, X-Mode faced scrutiny for selling access to the commercial location data of Americans’ past movements to the U.S. government and military contractors. Since its inception, X-Mode has imposed strict contractual terms on all data customers prohibiting them from associating its data with sensitive locations such as healthcare facilities.

The U.S. Federal Trade Commission has taken a groundbreaking step in protecting consumer privacy by banning data broker X-Mode Social from sharing or selling sensitive location data, the federal regulator announced on Tuesday. This settlement marks the first of its kind and significantly restricts the data broker, now known as Outlogic, from profiting off of users’ personal information.

“The FTC’s action against X-Mode makes clear that businesses do not have free license to market and sell Americans’ sensitive location data,” stated FTC chair Lina M. Khan.

Under this settlement, the data broker is required to delete or destroy all previously collected location data and any products created from such data, unless they have obtained consumer consent or ensured its de-identification. X-Mode has made its profit by purchasing and reselling location data collected from ordinary apps on users’ phones. While there are many data brokers in the industry, this particular company came under scrutiny for selling access to Americans’ location data to government and military contractors.

In response, tech giants Apple and Google demanded that developers remove X-Mode from their apps or face a ban from app stores.

The FTC’s investigation revealed that X-Mode sold precise location data that could track individuals’ visits to sensitive locations, such as medical facilities, places of worship, and domestic abuse shelters. The regulator also determined that the data broker did not adequately protect this sensitive data from being accessed by third parties or provide proper disclosure to users of their own apps, Drunk Mode and Walk Against Humanity.

“The information revealed through the location data that X-Mode/Outlogic sold not only violated consumers’ privacy but also exposed them to potential discrimination, physical violence, emotional distress, and other harms,” stated the FTC in a press release.

In addition to the ban on sharing and selling sensitive location data, X-Mode must now ensure that recipients of their data do not associate it with locations that provide services to LGBTQIA+ individuals, establish a method for consumers to easily withdraw their consent for data collection, and implement a comprehensive privacy program to protect personal information.

A statement from Broadsheet, the public relations firm representing Outlogic, states that they do not agree with the implications made in the FTC’s press release. They claim that there was no misuse of data found during the investigation and that strict contractual terms were in place to prevent sensitive locations, such as healthcare facilities, from being associated with the data. However, Senator Ron Wyden, whose office initially uncovered X-Mode’s sale of location data to U.S. military contractors, commended the FTC for taking action against this “shady location data broker.”

As the new era of digital privacy continues to evolve, it is imperative for businesses to respect and protect consumers’ personal information. This groundbreaking decision by the FTC serves as a warning to other data brokers that they do not have free license to profit off of Americans’ sensitive location data. Let this be a reminder that the protection of personal information should always take priority over corporate gains.

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Kira Kim

Kira Kim is a science journalist with a background in biology and a passion for environmental issues. She is known for her clear and concise writing, as well as her ability to bring complex scientific concepts to life for a general audience.

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