August 18, 2011, 4:47 PM

Groupon tries to assuage Congress on mobile privacy

The daily deal provider plans to track consumers, even if they don’t open an app.

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Groupon Inc. today told federal lawmakers that it does not currently access consumers’ location data when its mobile app is not running. However, the daily deal provider is planning to develop the technology to do so.

“A customer may wish to have a ‘push’ notification appear in her e-mail around the noon hour to alert her that a lunch special is being offered at a nearby restaurant,” wrote David Schellhase, Groupon’s general counsel, in a letter sent today to U.S. Reps. Ed Markey (D-Mass.) and Joe Barton (R-Texas). “In order to choose a relevant deal for the user at the correct time, location information would need to be collected about the user just before noon, even if the Groupon mobile application is not running on the device at that time. We are working to provide this type of functionality in the future.”

The disclosure came in the company’s written response to a written inquiry sent by the congressmen, who are co-chairs of the bipartisan Congressional Privacy Caucus, which last month began seeking information about the company’s privacy practices.

Groupon recently revised its privacy policies to allow the company to track mobile consumers’ locations even when Groupon apps are closed. The policy changes come as the daily deal leader continues to expand the breadth of its Groupon Now tool, which uses geolocation technology to offer deals to consumers based on their present locations.

However, Schellhase noted that consumers must explicitly consent to provide their location data to Groupon or else the company will not be able to collect the data. That’s because Apple’s operating system asks for the user’s permission to use location services when an app is installed. And both Google Inc.’s Android and Blackberry’s operating systems present a mobile user with a request to grant access to any services needed by an app, including location services, when an app is installed.  Consumers could install the Groupon Now app without agreeing to be tracked.

While Markey says he fears that Groupon could potentially misuse consumers’ personal information, he seems satisfied with the daily deal site’s approach. "It's appropriate that Groupon currently uses an opt-in feature for location-based services," he says. "This enables consumers to decide whether to grant permission for Groupon to pinpoint where a consumer is at any given moment so it can make offers tailored to that location. Transparent, easily understandable privacy policies are key here and I will continue to monitor this rapidly developing area of the industry."

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