'We Know Where You Are' Technology

Beware of that smartphone in your hand: It might be telling more about you than you'd like.

While a smartphone has become a communications must-have, offering services such as GPS location, Internet access and more, it's also gathering information about you -- data being marketed by your cellular provider to advertisers and other commercial services.

And that fact came as a shock to most consumers contacted by FoxNews.com, who had no idea their cell phone was anything but private.

“I feel violated, that they sell my information without me knowing," said Rupert Prout of Fresno, Calif. "I feel that they shouldn’t have the power and ability to do that.”

“I don’t love the idea of people selling information about me, trying to manipulate what I do in order to make a profit,” agreed Michaela Crib of Fresno, Calif.

Mobile ad services combine information from your phone's GPS location feature with other data from your service provider and package it up for sale to advertisers, keeping tabs on people through tags uploaded to their phones called cookies.

The "do not track" function coming soon to Web browsers will let consumers control the spread of these cookies on their PCs. But cellphones don’t have simple controls, privacy experts note. So tracking companies can use cookies to take your information and sell it to high-paying advertisers who can then specifically target ads at you.

Collective is one such company, compiling information to help ad agencies hone their messages. They use techniques like behavioral targeting to get you to click on ads that are targeted just for you, the company told FoxNews.com.

“[Behavioral ads] are far more effective for advertisers who are willing to pay a premium price," said Joe Apprendi, CEO of Collective. "So it’s extremely valuable,” he said.

And despite that fact that people are extremely bothered by the idea that advertisers are always watching them, Apprendi believes that behavioral targeting is not a violation of a person’s privacy. Consumers do have an option to “opt-out” of their collected data, he said.

“If they feel that that type of data is not important, we’re going to leave it up to the consumer, it’s for them to make that choice,” he said.

But how easy is it for a consumer to opt out of this anonymous data collection?

Marc Rotenberg, the executive director of the Electronic Privacy Information Center believes it's too difficult for consumers to find or change their privacy settings.

“The problem is being perpetuated by companies that the consumers have very little relationship with, which is why the Federal Trade Commission and Congress and others need to get more involved," he told FoxNews.com. "There’s just not much the consumer can do that’s very effective. That’s why we need some public policy in this area,” said Rotenberg, whose group advocates for stronger safeguards for Internet users.

“Do Not Track” options do allow users to immediately opt out of third-party data collection -- and many consumers simply don't know they exist.

“It bothers me, and I think it should be something that we should know -- that we're being tracked. I think that it should be out in the open and I don’t think everybody knows that,” said Louella Legaspi of Fresno, Calif.

Currently there are no laws that prohibit companies from obtaining personal information for location-based advertising. The general policy for consumer is to allow companies to “opt-in” to their current location. Facebook, Google, and Foursquare all have applications to determine a user’s location.

There are laws in the works in order to protect the consumer, however. A draft legislation was circulated during the last congress that intended to "specifically address behavioral targeting and would impose some limits and requirements on these practices." A new version of the bill is expected soon.

And the FTC recently released a set of guidelines, called “Advertising and Marketing on the Internet: Rules of the Road,” which directs advertisers in the proper ethics of marketing.

For Collective, geographic targeting is an important component of the overall online advertising package.

“About 30 percent of all that Collective delivers has some sort of regional targeting associated with it,” Apprendi said.

Rebecca Jeshke, Media Coordinator of the Electronic Frontier Foundation, thinks the best way to make sure you are clear is to do your research, check around online, see what other people are saying before installing new apps that could add to the data pool.

“When it comes to your phone, you should be very careful as to what applications you install," Jeshke told FoxNews.com. "Remember that any time you’re asking an application to gather information; you’re creating a data trail that you’re not the only one that may have access to.”