Commission spokeswoman Annabel Fordham said a high proportion of apps collected personal information, such as location or access to contacts.
However, it was not always clear why -- or how that information would be used.
"When apps don't convey ... what the business is collecting personal information for, it's hard for people to feel confident that their information is being looked after," Ms Fordham said.
"But when an app developer finds a way to be clear about what is happening, people notice -- it's a way to convey to users that you're trustworthy, that you know the value of their information and you'll treat it with respect.
"For this reason, it's really important that local agencies, businesses and app developers know that collecting more information than you need is unlawful, and it is also important that when these apps require permissions that might not make sense at first glance, the customer is told and can understand why these permissions are necessary."
Some apps provided links to webpages with privacy policies that were not tailored to the app itself. In other cases, the links led to social media pages that did not work or required the user to log in.
Only 15 per cent of apps gave a clear explanation of how they would collect, use and disclose personal information.
While a lack of privacy information in many apps was concerning, Ms Fordham said she felt this could be a case of developers being unaware of their responsibilities.
"The other issue of concern is that most people do not read the terms and conditions when they agree to downloading an app.
"That's usually because those conditions are not explained concisely and in plain language."
People should be cautious when downloading apps, Ms Fordham said.
"In terms of deciding what level of information is appropriate, that depends on what the app is intended to do. We suggest people need to pay particular attention to free apps ... If you have any doubts about an app, don't download it."
