Federal Trade Commission v. Kochava, Inc.

The Federal Trade Commission (FTC) (plaintiff) sued Kochava, Inc. (defendant), alleging that Kochava violated § 5(a) of the FTC Act by collecting and selling vast quantities of consumer data acquired from consumers’ cell phones. Specifically, the FTC argued that Kochava’s conduct constituted an unfair practice because it exposed consumers to secondary harm by third parties and invaded consumers’ privacy. After the initial complaint was dismissed for failure to include sufficient factual information, the FTC filed an amended complaint. The amended complaint referenced four of Kochava’s products, namely (1) geolocation data revealing consumers’ daily movements; (2) a database graph with detailed consumer profiles that included names, addresses, ethnicities, education, and employment; (3) an app graph showing consumers’ downloads and uses of apps; and (4) audience segments identifying consumers by characteristics or interests. The FTC reiterated that the aggregation and sale of the identified data posed two risks of harm to consumers. First, it put consumers at risk of secondary harm by third parties because Kochava’s customers could use the data to target consumers based on their activities and characteristics. The FTC provided examples of geolocation data being used to target consumers, although the specific examples did not rely on Kochava data. Second, the data aggregation and sales invaded consumers’ privacy by providing data that could reveal a person’s political and religious affiliations, medical conditions, sexual orientation, and more. Kochava again moved to dismiss the FTC’s complaint, arguing that Kochava’s mere collection and sale of consumer data neither caused nor was likely to cause a substantial injury to consumers as required for an unfair practice under § 5(a). The court considered Kochava’s motion.