FTC settles with company that helped retailers track customers

The Federal Trade Commission settled charges Thursday with a company that helps retailers track millions of customers via people’s mobile phones.  

The FTC accused Nomi Technologies of falsely implying that retail stores would notify customers when the tracking technology was being used. The company was also accused of falsely misleading people that they could opt out of the program at a store. 

{mosads}The FTC found that most of the 45 retailers who used the technology in 2013 did not inform customers that they were being tracked, and Nomi Technologies did not require them to do so. 

“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,” said Jessica Rich, the agency’s leader of consumer protection.

The commission approved the settlement, which included no fine, on a 3-2 vote. The settlement forbids the company from misrepresenting its opt-out and privacy terms. 

Both Republican commissioners Joshua Wright and Maureen Ohlhausen dissented, arguing the commission should have used discretion in going after a practice that was not proven to harm consumers. 

Wright argued the market itself appears to be correcting for the public’s unease with the technology. Nomi no longer offers the specific tracking tool to new clients, he said, but it still offers it to “legacy customers.”

It is unclear which retail stores were among the 45 that used the tracking technology in 2013. Naomi Technologies has not made that information public.

The technology works by tracking a 12-digit unique identifier on mobile phones, called a media access control (MAC) address. Retailers can place sensors around their stores and pick up the unique address as phones search for a Wi-Fi signal. The technology did not store personally identifiable information. 

The technology promises to give retailers information on the average time a customer stays in a store, the percentage of repeat customers, the number of customers who have visited multiple store locations, and the number of people who merely pass by rather than enter a shop. 

During the 2013 period in question, the company only allowed people to opt out online. However, it was difficult for customers to know the technology even existed because it was not posted in most stores. During that period, the company collected information on around 9 million people.