Are Your Shopping Habits Being Monitored? FTC Holds Seminar on Mobile Device Tracking
Seller Beware: Consumer Protection Insights for Industry
Last week, the FTC held a seminar on mobile device tracking, the first in a three-part series devoted to consumer privacy issues. (The later seminars will focus on alternative scoring products -- defined below -- and consumer-generated and controlled health data.) The seminar began with a technological overview of how mobile device tracking works, then shifted to a panel discussion focused on retail applications.
Although many may not be fully aware yet, the location of a mobile phone can be tracked using a unique identifier sent out via the phone's wi-fi, Bluetooth, or cellular (GSM) signals. Some retailers have begun to use these signals to track customers' movements while in their stores. Retailers can aggregate this data to determine customer flow through the store, how long customers spend in a particular department, or the time customers wait at the cash registers. As several panelists at the FTC seminar explained, a retailer can use this information to help improve the customer experience, by optimizing store layout and staffing.
The panelists debated at length the possible benefits of using such technology versus the concerns the technology raises with respect to consumer privacy. Several panelists posited that retailers will not abuse mobile device tracking technology because they do not want to risk losing business by upsetting their customers' trust. The two panelists involved in data analytics added that consumer privacy is not threatened where, as is the case with their retailer clients, the retailers receive only aggregated data and have no access to individual-level data collected from the customer devices. Those panelists also noted the safeguards afforded by the voluntary Mobile Device Analytics Code of Conduct developed in conjunction with the Future of Privacy Forum as a way to protect consumers' privacy.
On the other hand, Seth Schoen of the Electronic Frontier Foundation highlighted the potential privacy concerns he perceived and argued that consumer tracking should be on an opt-in basis only. When other panelists pointed to the potential consumer benefits -- such as retailers' ability to use a customer's real-time location to offer deals on nearby goods or provide a map to a desired item -- Schoen responded that customers who value such benefits should have the incentive to affirmatively opt-in by, for example, downloading a mobile app for the store. Currently, consumers can register their phones online to opt-out of mobile tracking by some participating companies.
The FTC will be accepting public comments on the topic of mobile device tracking until March 19th. The next seminar in the FTC's privacy series, focusing on alternative scoring products, is scheduled for March 19th. Alternative scoring products are predictive scores provided by data brokers that can be used to predict a wide variety of consumer behaviors, from credit risk to the likelihood that an individual is taking his medication.
© Arnold & Porter Kaye Scholer LLP 2014 All Rights Reserved. This blog post is intended to be a general summary of the law and does not constitute legal advice. You should consult with counsel to determine applicable legal requirements in a specific fact situation.