Companies agree to let shoppers know when their phones are being tracked

October 22, 2013 By Michael Virtanen Associated Press
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ALBANY— Eight companies have agreed to measures that will let shoppers nationwide know when retailers are using their smartphones to track their movements through a store, U.S. Sen. Charles Schumer said Tuesday.

The New York Democrat criticized the “intrusive and unsettling” trade practice in July. He said Tuesday that eight of the 10 leading location analytics companies have agreed to a new code of conduct that includes signs posted in stores to alert shoppers that tracking is being done and instructions on how to opt out.

“This is a major step forward in the quest for consumer privacy,” Schumer said.

Many major retailers use technology that allows them to trace activity in their stores by following Wi-Fi signals from phones. The Future of Privacy Forum, a Washington-based think tank, joined Schumer in raising the issue.

The technology companies are Euclid, iInside, Mexia Interactive, Nomi, SOLOMO, Radius Networks, Brickstream and Turnstyle Solutions.

Shoppers also can also turn off their phones’ wireless connections or leave their phones at home to avoid tracking.

“Today, location analytics companies have introduced a comprehensive code to ensure they have data protection standards in place to de-identify data, to provide consumers with effective choices to not be tracked and to explain to consumers the purposes for which data is being used,” said Jules Polonetsky, the forum’s executive director.

According to the code of conduct, the companies must get consent from a consumer if they will be contacted later based on their tracking information. The data won’t be used adversely for determining eligibility for employment, credit, health care treatment or insurance. And the companies agree to contractually require third-party data users also follow the code.

“The wave of the future for retailing is multi-channel retailing,” said Christina Ellwood, marketing vice president for Norcross, Ga.-based Brickstream, which is part of the Future of Privacy Forum that drafted the code. It applies to “any retail mobile location technology,” including the new Bluetooth low-energy technology, she said.

When a retailer tells customers to buy online and pick up items at the store, they tend to buy more, and some specifically let Wi-Fi customers check prices or merchandise in a store’s other departments, Ellwood said. “It helps their business and it helps their sales,” she said.

IInside chief executive Jim Riesenbach said it’s always been a retailing challenge to better understand what’s happening inside the store and how that applies to levels of service.

“What we’re doing with this new technology is identifying how much repeat activity is there, how long do people spend in different areas of the store, how long do people engage with different brands or products in a store,” Riesenbach said. “If a consumer wants to have more benefits associated with shopping at a particular retailer, they can opt into a particular app that may be able to send specific promotions.”

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