Facebook deceived hundreds of thousands of Australians, tracking every move made on their phones through an app supposed to protect their privacy, the consumer watchdog has claimed.

On Wednesday it was revealed that the Australian Competition and Consumer Commission has started proceedings in the Federal Court against Facebook and two of its subsidiaries for false, misleading or deceptive conduct.

The ACCC alleges consumers were tricked by the companies about the nature of Facebook’s Onavo Protect mobile app – a VPN or virtual private network service.

When flogging the app to Australian consumers, the ACCC said Facebook claimed it would keep users’ personal activity data private, protected and secret, and that the data would not be used for any other purpose.

Instead the app tracked the users’ personal activity data and reported back to Facebook, logging their internet history, which apps they opened and how long they spent in them.

The data was then used to support Facebook’s market research, including helping it identify potential future acquisition targets.

ACCC chair Rod Sims said hundreds of thousands of Australians downloaded the app.

Consumers often use VPN services because they care about their online privacy, and that is what this Facebook product claimed to offer,“ Mr Sims said.

“In fact, Onavo Protect channelled significant volumes of their personal activity data straight back to Facebook.”

The the app was promoted It’s the promise “on the basis it’s going to protect privacy” and yet at the same time the data of users was “being mined to track your activity on the internet and on various apps”, Mr Sims said in an interview with the ABC.

“The contrast between what was said and what was done that most concerns us,” he said.

Australia’s consumer watchdog is taking Facebook to court. Photo: AAP

Apple removed Onavo Protect from its App store in 2018 because of the data harvesting. It was later also removed from the Google Play store and was discontinued in 2019.

Facebook’s Instagram, WhatsApp buys under scrutiny

A separate legal case launched by US authorities, which focuses on competition issues not consumer rights, suggests data gleaned though the app was involved in Facebook’s acquisition of Instagram and WhatsApp, Mr Sims said.

“I’d be surprised if Onavo Protect data wasn’t relevant to the acquisitions of WhatsApp and Instagram,” he said.

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Mr Sims said Facebook had used the Onavo Protect data to “work out what apps people visited so that it could work out … which business it’s might try and acquire and which ones it could learn from, copy what they’re doing, so that those people would stay with Facebook or come to Facebook, rather than go to those other apps.

“It was very much to try to get more business onto Facebook, and try and, as it were, undermine competitive apps,” he said.

The ACCC will argue Facebook should be fined for its conduct, with potential penalties of up to $1.1 million per breach.

“What we’re trying to do with this action… is send messages to digital platforms about being honest with consumers about what’s actually happening when they engage with their platforms,” Mr Sims said.

“There really are some boundaries around that and we’re hoping these cases will set those boundaries.”

-with AAP