• by Wendy Davis  @wendyndavis, October 12, 2011

In what appears to be the first case of its kind, the Federal Trade Commission has brought an enforcement action against a mobile app developer for offering a product with “unfair” privacy default settings.

The peer-to-peer company FrostWire allegedly set the defaults on its free Android app to automatically make public files that users had previously placed on their phones -- including photos, ringtones, documents, music and the like.

Users could subsequently mark particular files as private, but the process was cumbersome, the FTC alleged in its complaint. The result, according to the FTC, was that “a significant number of consumers using Frostwire for Android could not reasonably avoid the unwitting public sharing of their private files.”

FrostWire, which enables file-sharing on Gnutella, agreed to change the default settings so that its app will not share users' files without their permission. The company also promised it is rolling out a fix for people who installed older versions of the software.

The FTC also took issue with FrostWire's desktop app, which allegedly misrepresented how much information was shared. That app's user interface “conveyed a misleading impression to consumers that certain files that they downloaded to their own computers from the Gnutella network would not, in turn, be shared from their computers with the Gnutella network,” the FTC said in its complaint.

But the more notable allegation concerns the mobile app, which was viewed as problematic on the theory that it violated people's reasonable expectations about what would be shared. “This is a very significant enforcement action,” says advertising lawyer Jeffrey Greenbaum, a partner in Frankfurt Kurnit Klein & Selz. He adds that the FTC is signaling that companies shouldn't surprise consumers with features that disclose private information. “It sends a very clear message to industry about the way in which we need to communicate with consumers when we're asking them to agree to things they normally wouldn't expect,” he says.