Stores Track Your Movements, and an FTC Case Shows How

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Stores want to know everything they can about consumers. They build massive databases intended to gather everything they can about you to help them target you with the most tempting offers. And they even snoop on your movements.

A settlement announced on Thursday by the Federal Trade Commission shows just how far technology allows retailers to go, in this case employing a company that captures the unique identifying code from your cell phone and tracks your movements.

Nomi Technologies is hired by retailers to plant sensors around their stores so they can follow you and know what you're looking at. There's nothing illegal there. But you ought to know that they're watching.

Violating Its Own Privacy Policy

That's not what ultimately got the company in hot water. Nomi was accused of violating its own privacy policy, which pledged that consumers would be told when they were being tracked and would be given a way to stop that tracking.

The FTC alleges that while Nomi promised that people could opt out of being tracked -- but by not telling anyone they were spying on them, they gave no way for consumers to stop the surveillance.

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

Nomi collected data from nine million mobile devices in just the first nine months of 2013, the FTC said, tracking movement both inside and outside stores, the type of device used, dates and times and even the phone's signal strength. Collecting all that information, the company would tell its clients about when customers would walk by without going in, how long they stayed in the store when they did go in, and whether they went to other locations of the same chain.

Aggregated Data, Aggravated Consumers

Nomi told the FTC that it obscures the unique identifiers from the cell phones, providing data to clients that does not identify them but rather just how customers move around in the aggregate.

But, generally, consumers are not very trusting of such projects and do not approve of the idea of stores snooping on them while they're shopping. A survey taken last year found that 77 percent of consumers objected to being tracked by their smartphone. The bottom line: they don't trust what the retailers are doing with that information.

The settlement doesn't punish Nomi. The company is simply forbidden from misrepresenting what options consumers have when it comes to how the information is being collected and used.

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