The privacy settings on your phone don’t mean much if tech companies choose to ignore them. One major mobile advertiser allegedly did just that.

The company InMobi was secretly tracking user locations, regardless of consent, the U. Federal Trade Commission has alleged. The motive: to serve location-based ads over mobile apps.

InMobi is headquartered in India and partners with thousands of apps to offer advertising. This gives the company access to 1.5 billion devices.

Collecting user information to serve tailored ads is all too common, but InMobi did so through deception, the FTC alleged. The company stated it would only collect the location-based data if given permission, however, InMobi secretly collected it anyway, the agency said.

InMobi also created a database that could guess a user’s whereabouts, even when the location-tracking function had been shut off, the FTC said.

Spying on children?

The company also allegedly tracked the locations of children, when promising not to do so.  A US privacy regulation requires companies collecting information about children to first gain the consent from their parents.

“The case is the FTC’s first charging a mobile ad company with deception and with violating the Children’s Online Privacy Protection Act,” the agency said in a blog post.

InMobi has agreed to a settlement and will pay a US$950,000 (around £640,000) fine. The company blamed a "technical error" for serving children with the targeted advertising.

In no way was this "deliberate" and the company notified the FTC as soon as the problem was discovered, InMobi said in an email.

It also said that the company was only tracking users’ location without their permission in "certain instances". The problems were corrected in last year’s fourth quarter, InMobi added.

As part of the settlement, InMobi must delete all the information it illegally collected and operate a privacy program for the next 20 years to keep the company in line with regulations. It must also honour the user's location privacy settings.