Surveillance in aisle three
February 16, 2014, 07:55 am
By Kate Tummarello
Federal regulators are beginning
to scrutinize retailers that secretly track the movements of customers in their
stores.
The Federal Trade Commission (FTC) is holding an event this week to
explore the growing use of commercial surveillance, which often happens without
customers' knowledge.
While the FTC is billing the event
as an exploratory workshop, privacy advocates are hoping it is the first step
toward cracking down on an increasingly popular practice that has raised eyebrows
on Capitol Hill.
Through a smartphone’s Wi-Fi and
Bluetooth capabilities, retailers can use mobile location technology to track
customers as they move around stores or shopping centers.
Sen. Al Franken (D-Minn.)
contrasted mobile location tracking with the more traditional store tracking
programs that customers must consent to.
“It's one thing to track someone’s
shopping habits through a loyalty card; folks understand that their information
may be collected,” Franken said in a statement to The Hill. “But it’s another
thing entirely to track consumers’ movements without their permission as they
shop.”
Franken said he looks forward to
seeing what comes out of the FTC’s focus on the mobile tracking of consumers.
Even if customers were aware of
the mobile location technologies, there’s not much they can do to prevent the
tracking without turning off their phones or disabling some of its
capabilities.
“Since the types of identifiers
tracked here are almost impossible to change without getting a new phone, and
since phones are pretty essential tools these days, this can be a highly
reliable method of tracking consumer behavior and habits over time,” said Joe
Hall, chief technologist for the Center for Democracy and Technology.
Seth Schoen — senior staff technologist
at the Electronic Frontier Foundation and a presenter at the FTC’s upcoming
event — said a store’s ability to track customers’ location should be viewed as
a security flaw rather than an opportunity for retailers.
“It's not something that [customers
have] given consent to and it's not something that they intended when they got
and used these devices,” he said.
Privacy advocates worry that
retailers would be able to combine the tracking data with information such as
purchase history to build intricately detailed profiles of customers.
But the retailers and mobile
location tech companies say these concerns are overblown.
Jim Riesenbach, CEO of iInside, a
mobile location tracking technology company, said retailers are only interested
in aggregate location data that shows them how people generally move through
their stores.
“We don’t provide anything that
looks at any individual consumer,” Riesenbach said.
“Our business is really about
helping retailers catch up with ecommerce,” where online retailers can
digitally monitor the way customers move around shopping websites, he said.
Riesenbach said anonymous,
aggregated tracking data helps retailers answer operational questions, such as
how to best organize their stores.
Those are “very, very valuable
observations,” said Mallory Duncan, senior vice president of the National
Retail Federation.
If a store using mobile location
technology can see that “people are moving from this department to another
department … than that could tell you something about rearranging your shelf
displays,” he said.
Last year, major mobile location
tech companies committed to collecting and using only aggregate, anonymous data
as a part of a broader code of conduct.
The code of conduct — written with
the help of advocacy group the Future of Privacy Forum and approved by Sen.
Charles Schumer (D-N.Y.) — also requires retailers to display signs informing
customers when they are being tracked in a store.
Additionally, tech companies that
have signed onto the code — which Riesenbach said includes the major players in
the field — must allow consumers the chance to opt-out of the tracking by
visiting a website maintained by the companies.
Jules Polonetsky, executive
director of the Future of Privacy Forum, said he welcomes FTC involvement in
the world of mobile location tracking “while the technology is still being
rolled out.”
“It is very hard to retrofit
privacy practices after businesses have invested in systems, so the time is
right to set good, but flexible rules in place,” he said.
Others are hoping the agency will
impose rules that go further than the companies’ self-regulation.
“The self-regulatory framework is
not effective,” said Jeff Chester, executive director of the Center for Digital
Democracy. “There need to be real rules, not self regulation.”
Chester said he expects to see more from the FTC on the topic
moving forward.
The agency’s decision to hold the
workshop is “a kind of acknowledgement by the FTC that it is looking very
closely” at technologies that track consumers’ locations, he said.
The FTC is “very interested” in
this technology, according to Robert Schoshinski, assistant director of the
agency’s Division of Privacy and Identity Protection.
Through the workshop and other
policy work in this field, the FTC will “assess the state of this technology”
and evaluate how its uses fit with current consumer protection laws, he said.
Federal Trade Commission (FTC)
Edith
Ramirez is the chairman for the Federal
Trade Commission (FTC) and was a partner at Quinn Emanuel Urquhart Oliver & Hedges, LLP.
Note: Crystal Nix Hines
is of counsel at Quinn Emanuel Urquhart
Oliver & Hedges, LLP and was Barack
Obama’s law school friend.
Barack
Obama was Crystal Nix Hines’s law school friend and an intern at Sidley Austin LLP.
Michelle
Obama was a lawyer at Sidley Austin
LLP.
Newton
N. Minow is a senior counsel at Sidley
Austin LLP and a member of the Commercial
Club of Chicago.
R.
Eden Martin is the president of the Commercial
Club of Chicago, and counsel at Sidley
Austin LLP.
Faith Elizabeth
Gay was a partner at Sidley Austin
LLP, is a partner at Quinn Emanuel
Urquhart Oliver & Hedges, LLP and a director at the American Constitution Society.
Open
Society Foundations was a funder for the American Constitution Society and the Atlantic Council of the United
States (think tank).
George
Soros is the founder & chairman for the Open Society Foundations.
Walter E.
Dellinger III is a board of adviser’s member for the American Constitution Society and was the acting solicitor general
for the U.S. Department of Justice.
Janet
Reno is a board of adviser’s member for the American Constitution Society and was the attorney general for the
U.S. Department of Justice.
Robert
Raben was a director at the American
Constitution Society and an assistant attorney general for the U.S. Department of Justice.
Eric H. Holder Jr.
was a board member for the American
Constitution Society and is attorney general at the U.S. Department of Justice for the Barack Obama administration.
Federal
Bureau of Investigation (FBI) is
a division of the U.S. Department of
Justice.
William H. Webster
was a director at the Federal Bureau of
Investigation (FBI), is an honorary director at the Atlantic Council of the United States (think tank), and
the chair for the Homeland Security
Advisory Council.
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