Rumor: Banks are spying on your smartphone's location

A Barclays logo is seen outside a branch in Altrincham, northern England, in April 2012.

Barclays' pending user agreement vows to use "location data" from any digital device it can get its hands on. Is it fraud protection or an invasion of privacy?

UNCONFIRMED:Not all banks do what Barclays does, but experts say the contract appears to guarantee info will only be used for fraud protection.

Conspiracy theory-peddling website Infowars last week blasted the headline "Bank To Spy On Customers Via Cellphone Location Tracking." The ominous story involved Barclays' customer agreement terms, which appear to be set to start in October, and expressly say that the bank will use "location data" from "any mobile device" it can get details on, in order to do things like market to its customers. We checked out the terms: They are real by all appearances. But while the language in the customer agreement is "poorly worded," as one privacy expert put it, it's likely not something to worry about.

The user agreement in question has since been pulled from Barclays' website, but a cached version can be seen here.

In the section titled "Changes to the ways we can use information about you," the bank lists several ways in which it can obtain and use its customers' personal information, including recorded voices and photos. At question in this case is the phrase, "The information we use will include location data derived from any mobile device details you have given us. This helps us protect you from fraud."

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'Poorly worded' contract

Ryan Calo, assistant professor at the University of Washington School of Law and advisory board member at the Electronic Privacy Information Center, said the language in Barclays' agreement was "poorly worded" and that he understood how it might sound alarming. But, he said, because the language specifies fraud protection, the bank is legally obligated to stick to that purpose.

"The limiter here is that it says, 'from fraud,' " Calo said. "You can't say, 'from fraud' and then use the information for something else."

Chris Hoofnagle, director of Information Privacy Programs at the Berkeley Center for Law & Technology, was equally unworried by the contract's language. He pointed out the anti-fraud capabilities created when location tracking is used, specifically for ATM customers.

"I have heard talk of plans to use location from cell phones to see whether people using ATMs are in fact near the ATM," Hoofnagle wrote in an email to MSN News. "It will be an interesting anti-fraud measure, because while it obviously can be used to address the problem of ATM card cloning, it can also address the problem of 'friendly-fraud,' where someone makes a charge voluntarily, but then claims that their card was stolen."

Wells Fargo does it, too

Barclays isn't the only bank that mentions location tracking in its customer agreement.

Well Fargo's privacy disclosure says: "Information that we may collect about you through online interaction includes information that you input, such as your name, address, email address, other contact information; data resulting from your activity, such as transaction information; and location information."

In Wells Fargo's case there does not appear to be a clear "limiter" of using the information for anti-fraud measures only.

Bank of America and Citibank appear not to use location tracking. The banks' customer agreements don't address the subject, and, reached by phone, customer service representatives at both banks told MSN News that the bank never tracks location data.

Barclays and Wells Fargo communications staffs did not return phone calls seeking comment on the subject.

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