The Federal Trade Commission (FTC) recently settled with Nomi (formerly known as Brickstream) over breaking its promise to inform customers that they are being tracked and to allow them to opt-out.
Nomi is not alone. ShopperTrak, RetailNext, Euclid, Walkbase and more than two dozen companies and start-ups offer some kind of location analytics. The attention on Nomi is probably a combination of privacy is a sensitive topic, GeoLocation is an emerging market, and Nomi attracted wanted attention by declaring itself as the #1 dominate company in people tracking technologies.
It also may also be because the opportunity was too good to pass up by the FTC.
Jessica Rich, director of the Bureau of Consumer Protection, said to Info Security Magazine:
“If you tell a consumer that they will have choices about their privacy, you should make sure all of those choices are actually available to them
The irony is that Nomi attempted to go beyond the current legal obligation because it promised consumers the ability to opt-out from tracking. Under the settlement, Nomi will not pay a fine and will not admit wrongdoing.
Three Key Themes Emerge from the FTC Actions
If you promise an opt-in, the process must be simple and in context.
Customers should be notified if the retailer is tracking their real-time movements in the store, even if the data capture is anonymous.
And Nomi was held responsible for the actions of its client retailers
The FTC ruling, however, creates more questions than answers. Below are some things to think about:
- The FTC complaint does not deal with the question of tracking people, just on the difference between what Nomi promised and what Nomi did in regard to consumer privacy.
- Nomi did offer an opt-out mechanism on its website, just not in the store, and not on their mobile. In other words, the company did not enable consumers to opt out during the tracking period itself.
- Nomi did not publish the name of its retail clients who were using the company’s tracking solution, nor required these retailers to notify their own customers.
- The dissenting commissioner also argued the FTC is sending a “dangerous message” to companies who “voluntarily” provide information and choice to consumers.
- It was easier for the FTC to go after companies that make a promise and fail, than to go after companies that make no promises.
- Location Analytics is used by retailers in various technologies, such as Beacons, NFC, Video and RFID. The FTC ruled against Wi Fi Tracking, but the repercussions could spill into other technologies such as Face Recognition and Mobile Payments.
How far will the FTC ruling reverberate with changes in the behaviors of the retailers, vendors and consumers?
Few retailers disclose their location-tracking practices.This will probably change.
In 2013, Nordstrom famously withdrew from smartphone tracking after receiving complaints from their customers. For retailers, however, the advantage of knowing more about their customers behaviors inside the physical store is a powerful drive for tracking.
People Tracking Vendors will probably adjust their legal status and privacy policies but not their sales practices. Retailers will demand a feature to disengage tracking, but the meaning of such action will be lost on most customers.
The most likely action by retailers and technology vendors will be to better adhere to the spirit of the Mobile Location Analytics Code of Conduct, issued by the Future of Privacy Forum.
While the guidelines for data privacy are stricter in Europe than United States, the key point is that the retailers “own” the data of their customers.
The Big Question is how consumers will alter their behaviors.
In a news segment by NBC, most people were unaware that their location was being tracked in real-time. And the first question was; “how do I turn it off?”
Experience from online retail tells us that people forgo their privacy if they see a clear benefit, the process is not intrusive, and consent is given on their own terms