How to fix "Violation of Usage of Android Advertising ID policy and section 4.8 of the Developer Distribution Agreement"

You could also disable Advertising ID and Analytics via Firebase:

• Disable the Advertising ID:

  <meta-data android:name="google_analytics_adid_collection_enabled" android:value="false" />
  

• Disable Analytics:

  <meta-data android:name="firebase_analytics_collection_deactivated" android:value="true" />
  

Or, you can write your Privacy Policy to say that you use these third-party SDKs that might collect data from users:

Because you made use of Google Play service it allows you to access advertiser ID as part of the API: http://www.androiddocs.com/google/play-services/id.html

You can follow this Privacy policy guideline by Google for your project https://developers.google.com/actions/policies/privacy-policy-guide

Design-wise I would put it where it is visible. Tell your client why you use Google Play API and put it in word your client would understand.

As of the specific, this is pretty clear to me:

Read through the Usage of Android Advertising ID and User Data policies, as well as the Developer Distribution Agreement, and make appropriate changes to your app. If you decide to collect sensitive user information, be sure to abide by the above policies, and include a link to a valid privacy policy on your app's store listing page and within your app. Make sure that your app is compliant with all other Developer Program Policies. Additional enforcement could occur if there are further policy violations. Sign in to your Play Console and submit the update to your app. Alternatively, you may opt-out of this requirement by removing any requests for sensitive permissions or user data.

Either you stop using Google Play service or you add a valid privacy policy in your description, in your app and on your app store.