WhatsApp, which ranks as one of the world's top five best-selling apps, is an instant-messaging application for smartphones including Apple's iPhone and Research in Motion's Blackberry.
The report comes at a time of increased criticism of internet companies, such as Facebook, over the storing and sharing of personal information.
Produced by California-based WhatsApp Inc, it provides a free internet alternative to SMS, or text messaging, sending more than a billion messages every day.
The Office of the Privacy Commissioner of Canada (OPC) and the Dutch Data Protection Authority, in a joint report released on Monday, said the app violated privacy laws because users have to provide access to all phone numbers in their address book, including both users and non-users of the app.
"This lack of choice contravenes (Canadian and Dutch) privacy law. Both users and non-users should have control over their personal data and users must be able to freely decide what contact details they wish to share with WhatsApp," said Jacob Kohnstamm, chairman of the Dutch Data Protection Authority.
WhatsApp was not immediately available to comment.
The investigators found that WhatsApp retained the mobile numbers of non-users, contravening privacy laws.
WhatsApp committed to making changes to protect users' privacy, including allowing the manual addition of contacts, according to the investigators. In September 2012, it introduced encryption for its mobile messaging service, partly in response to concerns raised by the investigation.
The Dutch agency said it would continue to monitor WhatsApp and could impose penalties if violations continued.
© Thomson Reuters 2012
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