prey project tracks mobile devices and helps to find stolen devices.
Is it safe from privacy perspective? How can I know that it doesn't spy on me?
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Prey bases on a software installed onto the device which pings regularly a server owned by prey. Prey could misuse this regular connection to get an ip address - identity link. Its hard to get rid of this one (eg. by using tor), so nothing to blame prey here.
The apps are open-source, so you can check yourself that when you only allow a small subset of the app's features in the app, other rights the app got by the system won't get executed, at least that's my interpretation of "Prey isn’t doing anything weird while running on your device." (FAQ entry "What about my privacy?").
You are on the safe side when you run in "prey standalone" mode. In this mode, you can set up an email address and password on the device, and let it send the report using that address in the case the prey server calls the device stolen. Worst prey could do is report the device as stolen in your name, and trigger a report, but you would be aware of it, and prey wouldn't get the data, as the mail comes directly to you.
If you use the web based control panel, things are not as shiny. Even if prey writes:
Not even we can see the reports since each device gets its own unique key, which only you have access to.
Prey is free, but for the app to work they have to have access to a lot of your information (TANSTAAFL)
Generally if an app is "free" its like any other "free" product on the internet in that they use your actions and track you to sell data about you. Prey may or may not be doing this but at the very least you should assume they track your actions as much as possible to improve their product (especially the paid version).
Looking at the app permissions page on in the google play listing reveals:
Version 1.1.3 can access: Identity
find accounts on the device
read your contacts
approximate location (network-based) precise location (GPS and network-based)
receive text messages (SMS) send SMS messages read your text messages (SMS or MMS) edit your text messages (SMS or MMS) receive text messages (MMS)
modify or delete the contents of your USB storage test access to protected storage
take pictures and videos
Wi-Fi connection information
view Wi-Fi connections
Device ID & call information
read phone status and identity
interact with a device admin receive data from Internet change your audio settings full network access run at startup view network connections modify system settings connect and disconnect from Wi-Fi change network connectivity prevent device from sleeping