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Retail Tracking Company Violated Privacy Policy, FTC Complaint Alleges

The FTC complaint alleges shoppers didn’t know they were being tracked and there was no in store opt-out mechanism for them to use.
/ Source: NBC News

If you make a promise in your privacy policy, you need to honor it.

That simple principle was the basis for the Federal Trade Commission’s (FTC) complaint against Nomi Technologies –- the first enforcement action by the FTC against a retail tracking company.

Nomi’s “Listen” service allows retailers to follow people as they move through their store –- or walk past it -– by tracking their mobile devices. Listen collects the MAC address (a unique 12-digit identifier assigned to each cellphone) as those devices search for WiFi networks.

The company’s privacy policy said it would always allow consumers to opt-out of being tracked on its website and at any retailer using its technology. According to the FTC, this promise implies that customers would be informed they were being tracked, so they could opt out.

The FTC complaint alleges shoppers didn’t know they were being tracked and there was no in store opt-out mechanism for them to use. That could only be done online.

Nomi tracked about nine million mobile devices within the first nine months of 2013, according to the government’s complaint.

“It’s vital that companies keep their privacy promises to consumers when working with emerging technologies, just as it is in any other context,” said Jessica Rich, director of the FTC’s Bureau of Consumer Protection, in a statement. “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.”

In agreeing to settle the charges, Nomi is prohibited from misrepresenting people’s options for controlling whether information about them or their devices is collected, used, disclosed or shared.

In a statement emailed to NBC News, the Nomi Corporation (formed when the company merged with Brickstream last October) wrote:

“We continually review our privacy policies to ensure that they follow best practices and had already made the recommended changes in pursuit of that goal by updating our privacy policy over a year and a half ago, while we were still an early-stage startup that was less than a year old. Our mission has always been to help clients deliver the best possible customer experience, and a key part of achieving that goal is empowering consumers with choice.”

Nomi’s technology is still deployed, making it possible for retailers to follow customers via their mobile devices. The company’s new privacy policy provides just one way to opt out of this data collection – via its website – not in the store.

If you don’t opt out and you go into or pass by a store with this technology, the retailer will be able to follow your movement and know if you came in or kept walking, how long you were in the store and if you visited another one of their stores.

Keep in mind: Other companies offer similar mobile tracking services. If you don’t want to share your location information, turn off the GPS location feature and WiFi when you don’t need to use it.

Herb Weisbaum is The ConsumerMan. Follow him on Facebook and Twitter or visit The ConsumerMan website.