Smartphone Tracking by Retailers Is a Common Occurrence

Smartphone tracking

Smartphone tracking by retailers is a common occurrence. In exchange for free access to the internet, a retailer can follow a user’s movements inside a mall or store. It is done by tracking a unique 12 character string of numbers and letters assigned to every smart phone known as the media access control (MAC) address.

The address is not linked to any personal information such as a name, email address or credit card. The MAC address links specifically to a phone. When a smartphone is turned on, it sends a MAC address signal when searching for a Wi-Fi connection. If a retailer offers free internet access, it can also follow the smartphone as the customer travels through a store or mall.

With a MAC address, data miners can collect information on when and where a customer shops. Does that person go to the Toy Department? If so, what section of that department? Did a Sunday advertisement attract people to an item? How long does that customer stay in a particular department? If there are a series of smart phone owners lined up at the front of the store, that could indicate there are lines forming at the checkout counters and more cashiers are needed. Mall owners could use the technology to see what stores are more popular than others.

Mined data of such visits can help track what items might be selling and if that item needs to be moved to a better location for easier customer access. Information collected is supposedly anonymous and cannot be later traced. Data miners use a process known as hashing where they provide mobile information at places such as airports, grocery stores, and retailers. By capturing a shopper’s MAC address from customer smartphones and scrambling the numbers and letters to conceal the original addresses, the customer remains anonymous.

Jim Riesenbach of iInside, a California based mobile location company that data mines MAC addresses wants to help brick and mortar companies compete with online retailers. Store owners and managers want to know where and when customers shop in their stores and what items interest these shoppers. Riesenbach admits there is a fine line where that information is vital to a store’s survival and violating a customer’s trust.

Customer privacy advocates contend smartphone tracking by retailers is nothing more than spying. The same information of what is popular in a store or if more cashiers are needed at a certain time can be gathered by simple employee observation and cash register receipts. Shoppers ought to be informed their phones are being used for tracking and marketing purposes. People should have the option of being able to opt out of such tracking.

Seth Schoen, a senior technologist at the Electronic Frontier Foundation contends the scramble for hash MAC addresses are not completely secure. The hash information concerning the MAC address may not be encrypted so the retailer would know the person entering the property and could confirm someone as a regular shopper.

Smartphone tracking by retailers is a common occurrence and Schoen has another concern about tracking someone. People have the right to privacy and following a MAC address would confirm someone visited an adult store or had a secret tryst. Such information would be invaluable to a divorce lawyer or government agencies.

The Federal Trade Commission recently held a workshop on the issue of smartphone tracking by retailers. Amanda Koulousias, an FTC attorney wants an improved understanding of how retailers use phone location technology and if shoppers ought to be notified of the technology being implemented inside a store or mall.

Nordstrom applied the hashing technology to 17 of its retail stores in September 2012 as a test marketing program. At store entrances, signs were posted informing shoppers they could turn off their Wi-Fi to opt out of the program. The trial ended in May 2013 when customers complained about the tracking making them feel uncomfortable when they shopped.

Euclid, iInside, and Mexia Interactive are the major data miners. They have all agreed to a code of conduct calling for notification in stores if hashing occurs. They believe customers should be able to opt out of hashing. These data miners believe most people will keep their phones on and go about their shopping. Those concerned can be reminded of the signs displayed at the entrances and shown how to turn off their Wi-Fi feature. Smartphone tracking by retailers is a common occurrence and is likely to continue despite privacy issues.

By Brian T. Yates


New York Times


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