Antitrust Law Daily Wrap Up, PRIVACY NEWS—Senator calls on FTC to investigate retailer tracking of customers, (Jul 31, 2013)

By Jeffrey May, J.D.

Major national retailers should be required to get permission from shoppers before tracking their in-store movements via WiFi signals, according to Senator Charles E. Schumer (D-New York). Schumer sent a letter to the FTC yesterday, asking the Commission to look into whether the practice by some brick-and-mortar retailers of tracking shoppers through signals put out through their smart phones without consent is an unfair or deceptive trade practice.

“Over the past several months retailers around the country have increasingly been exploring technologies that use a shopper’s unique cell phone ID to follow their movements throughout shopping centers and individual stores,” said Schumer. “As these technologies become more widespread, it is imperative that we protect our consumers from unknowingly giving out information they do not desire to.”

According to Schumer, the FTC should require that retailers give shoppers a clear and obvious opportunity to “opt-out” before tracking them. Schumer suggested the FTC require that stores send electronic notices to the phones they are about to start tracking, and give the owners of those phones a chance to opt-out. However, the letter itself simply calls on the agency to investigate the practice at this time. Currently, consumers who do not want to be tracked must turn off their phone’s Wi-Fi, or leave their phone at home.

“If stores are going to track you footstep by footstep, you should be alerted in no uncertain terms, and be given the opportunity to decline,” said Schumer. “Personal cell phones are just that—personal.”

United Colors of Benetton, American Apparel, Swatch, and Family Dollar are among the retailers that have been identified in media reports as having tracked consumer movements through smart phones, according to Schumer's statement. Tracking technology is provided by companies like Cisco, Euclid Analytics, and Path Intelligence, it was noted.

This would be new territory for the FTC. The agency did, however, go after retailer Sears in 2009 for allegedly failing to disclose to online consumers the scope of the personal information it collected via a downloadable software application that tracked consumers’ “online browsing.” More recently, the FTC announced final consent orders settling allegations that seven rent-to-own companies and a software design firm that licensed software to the rent-to-own stores engaged in “spying” by activating location-tracking software on the rented equipment without notice to or consent from the renters and deceptively collecting and disclosing information about those consumers.

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