One More Thing Coming This Holiday Shopping Season: Notice and Consent and the Option to Opt-Out from Mobile Location Behavioral Tracking by Retailers

November 12, 2013

Tuesday, November 12, 2013, by Daniel Parisi
Technology continues to advance at an incredible pace.  Did you know that a growing number of retailers are using the WiFi and Bluetooth signals from the cellphone in your pocket to track your shopping habits and your movements throughout their stores?   The latest technology is accurate to within a few feet.  How long do you spend in a particular aisle looking at what particular products?  When and how frequently do you return to a particular store?  Until now, this practice of tracking customers and collecting data on them has often been done without any notice or consent.

Did you know that a growing number of retailers are using the WiFi and Bluetooth signals from the cellphone in your pocket to track your shopping habits and your movements throughout their stores?

How does the technology work?  Every cellphone has a unique “MAC” address or network identification number.  Your WiFi and Bluetooth services on your cellphone constantly broadcast themselves to other devices, as you move around in the world, including broadcasting themselves to devices owned by the store.  Your WiFi and Bluetooth services are simply looking for available networks to connect to.  But retailers have turned this functionality into a behavioral tracking mechanism.  Even if you don’t connect to the store’s devices, your exact location to within a few feet is repetitively broadcast to the store and is uniquely identifiable by your cellphone’s network identification number.  The information is collected by retailers and mobile location analytics companies (“MLACs”).   The MLACs can then combine the data with data from other sources and offer that information for sale.
Senator Chuck Schumer of New York has identified the problem.  “Cell phone tracking is intrusive and unsettling – it’s as if you are being followed around while shopping at the mall, with someone looking over your shoulder at every product you are considering. . . . Personal cell phones are just that – personal.  They shouldn’t be used as some James Bond-like tracking device without the shopper’s knowledge.”
The United States has well-established core principles for fair information practices.  The Federal Trade Commission (“FTC”) calls these principles the FIPPs, which is short for the fair information practice principles.  The two most fundamental principles are the requirements of notice and consent.  Additionally, the FTC has the authority to take enforcement actions against “unfair or deceptive” business practices.  The FTC has taken an active role in the mobile technology space and has provided specific recommendations regarding privacy and mobile technologies.
Just in time for the holiday shopping season, on October 22, 2013, Senator Schumer and the mobile location analytics industry announced a new code of conduct and a self-regulatory regime, which will offer customers notice of data collection and the option to opt-out of data collection.  However, it is unknown when the central opt-out website will be available.  Also, as of now, only some MLACs, but no retailers, are known to have signed onto to the code of conduct.  But keep your eyes open this holiday shopping season for notices and instructions on opting-out posted in store windows.  Alternatively, you can turn your WiFi and Bluetooth functionality off before going shopping or you can leave your cellphone at home.  Happy Holidays!