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.

Phone Tracking Firm Nomi Settles Privacy Violations With FTC

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.

Privacy advocates are pointing to this situation as a “worst case” scenario, as Nomi’s privacy policy “pledged to … always allow consumers to opt out of Nomi’s service on its website, as well as at any retailer using Nomi’s technology,” but instead just recorded everyone’s data without giving any notice or chance to opt out..

The complaint details that he opt-out option is available online, but not at any participating stores. Furthermore, consumers were not informed of the tracking at all, so the firm’s privacy policy was a complete scam in that there was no way to know you were being tracked so you could choose to opt out!