Google is facing fresh legal action over claims it recorded users' locations, even after they had switched off its optional 'Location History' setting on their device.
The company is under investigation by Arizona's attorney general, who is looking into whether the search firm deceived its users.
Google could face huge fines – up to $10,000 (£7,770) per violation – if the claims are confirmed by a team of lawyers assembled by the state of Arizona.
This could lead to unprecedented penalties in the United States, potentially prompting similar moves elsewhere in the world.
Google previously claimed it did not mislead customers over its location tracking.
The investigation was launched by Republican Mark Brnovich, according to a person familiar with the matter who spoke to the Washington Post under the condition of anonymity.
A public filing dated August 21 – one week after an explosive report revealed the extent of the location tracking undertaken by Google – has recently come to light.
The redacted document reveals Brnovich's office has hired a team of lawyers to look into an unnamed technology company.
The team are investigating its 'storage of consumer location data, tracking of consumer location, and other consumer tracking through . . . smartphone operating systems, even when consumers turn off "location services" and take other steps to stop such tracking.'
A spokesman for the Arizona attorney general's office has since released a statement on the matter.
'While we cannot confirm the company or companies at the center of this probe, we decided to move forward and retain outside counsel after a series of troubling news reports, including a recent story that highlighted Google's alleged tracking of consumer movements even if consumers attempt to opt out of such services,' Katie Conner told ZDNet.
'General Brnovich has prioritized consumer data privacy and cybersecurity since taking office. This investigation shouldn't surprise anyone who knows him well.'
Google clarified its position on tracking in a statement to the Washington Post.
Google spokesman Aaron Stein said location data 'helps us provide useful services when people interact with our products, like locally relevant search results and traffic predictions.'
MailOnline has contacted Google for further comment but had not received a response at the time of publication.
This is not the first time that Google has had to fend off legal action over the decision to continue to track users who switched off the 'location history' setting.
Google is already embroiled in a California court case.
According to a complaint filed in August, Google falsely assured people they would not be tracked if they turn the 'Location History' feature on their phones to 'off,' and instead violates their privacy by monitoring and storing their movements.
It alleged that Google is in violation of California's Invasion of Privacy Act.
'Google represented that a user can turn off Location History at any time. With Location History off, the places you go are no longer stored,' the complaint filed in San Francisco federal court stated. 'This simply was not true.'
The plaintiff, Napoleon Patacsil of San Diego, is seeking class-action status on behalf of every US-based user of Android and iOS smartphones who turned the tracking feature off.
He is seeking unspecified damages for Google's alleged intentional violations of California privacy laws, and intrusion into people's private affairs.
The move follows an explosive report by the Associated Press, which revealed that several Google apps and websites store user location even if users turned off Location History.
For the investigative report, Princeton postdoctoral researcher Gunes Acar carried an Android smartphone with the 'Location History' setting turned off.
Despite the setting purportedly preventing data collection, researchers discovered Google had kept records of Dr Acar's train commute on two trips to New York and visits to the High Line park, Chelsea Market, Hell's Kitchen, Central Park and Harlem.
Researchers then plotted the locations on a map. They found that Google keeps track of your current location each time you open Google Maps.
The daily weather updates on Android phones also provided another way to track movement.
Google altered its website so that it says turning Location History off 'does not affect other location services' in phones and that some location data may be saved through other services, such as Search and Maps.
Previously, the page stated: 'With Location History off, the places you go are no longer stored.'
Google acknowledge the change in a statement to reporters.
'We have been updating the explanatory language about Location History to make it more consistent and clear across our platforms and help centers,' Google said in a statement to the Associated Press at the time.
Privacy experts have assailed Google's policy of saving user location data that it doesn't technically classify as 'location history.'
Additionally, a privacy group stated in a letter to the Federal Trade Commission that Google violated the terms of a 2011 settlement by collecting users' data even when their Location History was turned off.
In that settlement, Google said it wouldn't misrepresent its practices related to '(1) the purposes for which it collects and uses covered information, and (2) the extent to which consumers may exercise control over the collection, use, or disclosure of covered information.'
As part of the settlement, Google also agreed to a 20-year monitoring regimen.