“RETAIL TRACKING” AND NOMI’S ALLEGEDLY DECEPTIVE PRACTICES
Retail tracking occurs when retailers, or their third-party service providers, capture and track the movements of consumers in and around stores through their mobile devices, such as through the use of WiFi or beacons, in order, for example, to better understand store traffic or serve targeted offers.1 Given the potential lack of transparency around the practice and the corresponding privacy implications, it is not surprising that the FTC decided to address the practice.
THE FTC KEEPS NOMI NARROW, FOR NOW. WHAT LESSONS CAN OTHERS LEARN?
The proposed order provides for very narrow injunctive relief: it simply enjoins Nomi from misrepresenting how consumers can control the collection, use, disclosure, or sharing of information collected from them or their devices, and from misrepresenting the extent to which consumers will receive notice about such tracking.
Nomi is the FTC’s first case involving brick-and-mortar tracking, and the FTC is not yet creating new law: specifically, the proposed order does not require the company to provide notice and choice in connection with retail tracking. This raises the question of whether the FTC would ever impose such an obligation. We have no certainty around the FTC’s view, but it is reasonable to anticipate that the FTC will move in a direction that mirrors its position with respect to online tracking — that is, that at least when information is collected for targeted advertising purposes, a company should provide meaningful disclosures to consumers about the tracking and choice with respect to whether to allow it.2 The FTC could ultimately deem a failure to provide such notice and/or choice an unfair and/or deceptive practice under Section 5 of the FTC Act.
What does this mean for retailers and other places of business? In light of Nomi and our expectations with respect to the direction the FTC is likely to take, companies that engage in in-store tracking should consider how best to provide their customers with notice and choice. One option is to track only those customers who have downloaded the retailer’s app and agreed to be tracked for identified purposes, such as the delivery of targeted offers. Another option is to use a vendor that subscribes to the Future of Privacy Forum Mobile Location Analytics Code of Conduct,3 which requires participating mobile location analytics companies to, among other things, provide consumers with appropriate notice and choice.