Soltani: Retail Tracking Technology Presents Privacy Trade-Offs

“Retail tracking technology has been somewhat controversial,” and its use has been discontinued by retailers such as Nordstrom and cities such as the City of London, after “consumers were made aware of the practice and expressed privacy concerns,” wrote FTC Chief Technologist Ashkan Soltani in a blog post Thursday. Soltani cited a recent OpinionLab survey that found eight out of 10 shoppers said they don’t want stores to track their movements via smartphone. Forty-three percent of shoppers said they would be less likely to shop at a favorite retailer if the store used a tracking program, he said. “Privacy issues are further exacerbated by the fact that most consumers are not aware that their device information may be captured as they walk by a store or visit an airport.” Retail tracking generally works by monitoring an individual's movements in or near certain locations, Soltani said. “Early retail analytics services relied on in-store cameras to optically record individual's movements (reflected ‘photon emanations’ to be geeky) in order to count foot traffic or create heat maps of which product displays might be most popular.” Newer approaches monitor signals from an individual’s devices as the device searches or communicates with nearby devices and networks, Soltani said. Active monitoring is when the cell provider or Wi-Fi hot spot connects directly to the device, he wrote. Passive monitoring is when the signals from the device are intercepted, he said. Some retail analytics providers “hash” or “obfuscate the original identifier” to reduce privacy concerns, but hashing is of “limited effectiveness,” Soltani said, as was pointed out in the FTC commissioners' majority statement in the agency's settlement announced last week with Nomi Technologies (see 1504230036). The degree of notice given to consumers when this technology is deployed varies, and passive techniques generally operate under an opt-out regime, Soltani said. “Retail tracking has many benefits for retailers and consumers alike,” but the “technology does present privacy trade-offs,” he said. “There are a number of things that industry could do to alleviate the privacy concerns and address some of the gaps in consumer awareness.”