A dirty little secret in retail is that every shopper that sets foot through the door of a major retail chain is being tracked in an extraordinary level of detail.
The Federal Trade Commission announced Friday it’s taking basically no action on the matter.
It announced that it had settled with a New York startup that stealthily tracks the movements of American shoppers in stores and malls using their smartphones’ Wi-Fi signals.
The FTC alleged that in late 2013 Nomi Technologies broke an FTC Act by not being upfront with shoppers.
Large retail chains use Nomi’s Listen service to analyze foot traffic through their stores: managers place Nomi Wi-Fi hotspots throughout their stores which in turn pinpoint citizens’ handhelds and log their physical whereabouts.
This is useful for store owners as they can see where shoppers tend to move in the store and what areas they avoid. New displays and store layouts can be tested to see how shoppers respond to the changes. Shoppers are tracked by their phone’s MAC addresses.
Between January and September 2013, Nomi’s technology tracked over nine million handhelds. By October that year, the company had 45 clients using the tech, although it won’t disclose who they are.
Each shopper is, forever, uniquely identified in the upstart’s database. Nomi compiles the data into stats for retailers to crunch.
Nomi ran into issues with the FTC by claiming it had a clear and obvious opt-out mechanism for user who still think that privacy exists in this country.
The FTC, however alleged in its complaint that Americans can only truly opt out and avoid being spied on if they visit Nomi’s website and add their MAC addresses to a blacklist.
But shoppers never have any idea Nomi’s technology is present in a given store – so the offer of an opt-out is worthless because consumers don’t know they’re being tracked.
“The acts and practices of respondent as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act,” the watchdog said.
Under the terms of a rather toothless settlement published on Thursday, Nomi no longer claims citizens can opt-out of the system.
People can still opt-out of the technology via the web, but because its so hidden, there’s no point making statements online and in store that it exists.
In a statement, Nomi said: “We are pleased to reach this agreement. We continually review our privacy policies to ensure that they follow best practices, and had already made the recommended changes.”
And we’re sure they are. It’s troubling that the FTC is allowing such tracking technology to exist without clear disclosure to users.
In Europe, when you visit a website, the site must inform you how exactly it is tracking you and what it is doing with the data.
America needs an equivalent to this, both for websites and brick and mortar stores. People need to be informed about which of their data is being collected and how it is being used. They also need to be made aware of how to not participate in these programs.
It’s troubling the FTC is taking such a hostile-to-Americans stance on this serious issue.
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