Consumer News

Nomi Settles FTC Charges It Misled Consumers on Mobile Tracking

Despite promises to the contrary, shoppers could not opt out of the tracking service.

Consumer News

Nomi Settles FTC Charges It Misled Consumers on Mobile Tracking

Maybe The Matrix wasn’t that far off. Maybe we really are just mice in a maze … man.

A company whose mobile tracking service allows retailers to monitor shopper movement has agreed to settle FTC allegations that it misled consumers on how they could control the technology. Despite promises to the contrary, shoppers could not opt out of the tracking service, according to the FTC’s complaint against Nomi Technologies.

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Like rodents after Romano cheese, unwitting consumers were shadowed as they entered stores equipped with sensors that picked up on their smartphones’ Wi-Fi signals, initiating the surveillance process, the FTC alleged.

At no point were consumers with targeted devices clued in on the tracking. Tracking provides merchants with valuable insight into consumer behavior, such as how long a customer stays in the store and the number of repeat customers in a given period. Nor were consumers given the choice to opt out of the service as promised in the company’s privacy policy, the FTC alleged.

Said Jessica Rich, director of the FTC’s Bureau of Consumer Protection:

It’s vital that companies keep their privacy promises to consumers when working with emerging technologies, just as it is in any other context. 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 information on about 9 million mobile devices during the first nine months of 2013. During that time, “most, if not all” of Nomi’s clients did not post information notifying consumers that the store was equipped with the tracking service, the complaint states. The FTC does not name any of the stores with which Nomi did business.

RELATED: Somebody’s watching you

The FTC voted 3-2 to approve a consent order prohibiting Nomi from misrepresenting consumer options, but the technology company faces no fine and does not have to change its mobile tracking practices. The two dissenting commissioners argued that the broken privacy policy didn’t harm any consumers because it did not put their personal information at risk.

Wrote Commissioner Joshua D. Wright:

Nomi does not track individual consumers — that is, Nomi’s technology records whether individuals are unique or repeat visitors, but it does not identify them.

If this does not make you feel any better about being stalked around a store or mall, here’s some information on how to disable location tracking on your smartphone.

Nomi is not the only one offering the technology. Find more of our coverage on in-store tracking here.

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