24/06/2016 7:24 PM IST | Updated 15/07/2016 8:27 AM IST

India's First 'Unicorn' InMobi Fined $950,000 For Violating Consumer Privacy

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Surveillance camera peering into laptop computer

In a major setback, mobile advertising startup InMobi has been slapped with a $950,000 fine by a US regulatory body for tracking consumers’ locations without their consent.

American consumer protection agency, the US Federal Trade Commission, alleges that InMobi “deceptively tracked the locations of hundreds of millions of consumers – including children – without their knowledge or consent to serve them geo-targeted advertising.”

InMobi’s whose advertising network has reached more than one billion devices worldwide through thousands of popular apps, offers multiple forms of location-based advertising to its customers, including the ability to serve ads to consumers based on their current locations, locations they visit at certain times, and on their location over time, FTC noted in a statement.

Under the terms of the settlement with the FTC, InMobi will have to put in place a comprehensive privacy program that will be independently audited every two years. It has also been asked to delete all information it collected from children, and honour privacy regulation going forward.

An InMobi spokeswoman toldThe Hindu that during the course of the FTC investigation it had found a “technical error” that led to some faulty processes that resulted in some COPPA sites being served with interest-based campaigns on its network. It said the errors were fixed in Q4 2015, and since then it has been fully compliant with all COPPA regulations. COPPA is the Children's Online Privacy Protection Act, a US federal law that imposes requirements on sites and online services to ensure children’s online privacy.

“InMobi promptly notified the FTC of this issue as soon as it was discovered and has made it clear from the outset that this was by no way means deliberate," said the InMobi statement.

According to the FTC, InMobi was initially subjected to a $4 million civil penalty which was pared down to $950,000 based on the company’s financial condition.

InMobi, founded in 2007, was among India’s first “unicorns”—companies valued at over $1 billion. But its valuation has since slipped to $800 million as the company has struggled to retain marketshare against giants like Facebook and Google, according to media reports. It has also seen high levels of senior management attrition, with a dozen senior to mid-level management level executives leaving the company recently, according to an Economic Times report.

InMobi’s backers include Japan's SoftBank, Kleiner Perkins Caufield & Byers and Sherpalo Ventures.