The U.S. Federal Trade Commission announced on Thursday it had reached a settlement with cell phone tracking firm Nomi Technologies regarding charges relating to a deceptive opt-out agreement.
The FTC’s complaint noted Nomi’s privacy guidelines claimed the company would offer an opt-out mechanism at stores using its service, meaning that customers would be informed that the tracking technology was being used.
However, customers were not informed at all about the tracking technology, and no in-store opt-out mechanism was provided for customers who did not want to be fracked. The FTC claims Nomi collected information on nine million mobile devices.that it tracked in the first nine months of 2013.
Statement from the FTC
“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, commented 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.”
More on Nomi’s cell phone tracking technology
Nomi’s new tracking technology works by placing sensors in clients’ stores that can identify the MAC address of every mobile device that enters the shop and searches for a Wi-Fi network (ie, has Wi Fi service turned on).
Nomi does “hash” the addresses it ids prior to being stored, but the unique identifier of each phone is still accessible, and can be tracked from then on. The FTC’s complaint is that Nomi did just that, tracking the MAC address, device type, signal strength and other data on consumers both inside and outside of the stores
Moreover, all of the data collected was then distributed as client reports detailing how many people passed by the store and didn’t come in, how long customers remained in the store, what sorts of devices they had, the number of repeat customers and how many went to other stores.