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Location tracking opt-out could land big blow to retail technology

A new opt-out Web site for indoor mobile location tracking could land a big blow to the companies focused on improving the in-store shopping experience by gleaning insights from smartphone-wielding shoppers.

In a move intended to show regulators that the mobile location services industry is capable of self-regulation, the Future of Privacy Forum and The Wireless Registry have teamed up to launch a Web site where consumers can opt-out from having their location tracked at retail stores, airports and other places. While a number of third-party companies involved in tracking such information are involved, such as Euclid, iInside, Path Intelligence and Radius Networks, some big names are also missing from the list.

?The companies mentioned represent the bleeding edge of retail analytics, but I think we are missing a number of major players here, including one beginning with G,? said Patrick Connolly, London-based senior analyst at ABI Research.

?Until the major search/mobile advertising firms sign up I think it is ineffective in terms of protecting those that have concerns and have a right to be excluded,? he said.

?If this is widely adopted by the masses it will be a major blow to the retail technology market, the aim of which is to ultimately improve the shopper experience."

Code of conduct
The industry has known for several months that a Federal Trade Commission workshop on location tracking is scheduled for today, so the timing of the new opt-out Web site, which went live yesterday, sends the message that the mobile location services industry is taking privacy concerns seriously.

The site is a follow-up to new privacy guidelines introduced late last year by the Future of Privacy Forum and Sen. Charles Schumer (D-NY) specifically addressing the tracking of mobile users? in-store activities (see story).

At today?s event, the Future of Privacy Forum also plans to present some signage around making consumers aware of when location tracking is taking place.

?Mobile location analytics is key to heat mapping consumer behavior for retailers and malls,? said Gary Schwartz, president and CEO of Impact Mobile, Toronto, as well as a retail advisor to The Wireless Registry. ?This industry has exploded this past year and come under the scrutiny of the Beltway regulators.

?The industry can and should self regulate ? FPF is doing a great job working with all stakeholders to make this new MLA data economy transparent,?

?While all data is anonymized, digital identity is under heightened scrutiny. We all know that in a world of billions of sensors, the industry needs to have a way of opting out devices but additionally sensors associated with toys, medical devices, etc.?

Understanding traffic patterns
There has been growing concern over the practice of tracking mobile users? indoor location after it was revealed last year that Nordstrom was tracking in-store shoppers when they accessed the retailer?s Wi-Fi, a practice the retailer quickly stopped.

The rapid growth in beacon technology is also gaining the attention of regulators. However, consumers typically have to opt-in to receive communications from retailers using this technology.

Retailers, airports and other venues are interested in the data that can be collected from mobile users inside their physical locations because it can help them improve the in-store shopping experience by better understanding traffic patterns. Such data also helps these businesses lay the groundwork for delivering mobile advertising to shoppers.

Alleviating some of the privacy concerns around in-store tracking could open the door for retailers and others to invest more heavily in Wi-Fi and other technologies.

MAC address
The Web site created by the Future of Privacy Forum and The Wireless Registry enables consumers to enter their phone or mobile device?s Wi-Fi or Bluetooth MAC address to opt-out of having their location collected inside a physical location.

The full list of location tracking companies participating in the new site includes Aislelabs, Brickstream, Euclid, iInside, Measurence, Mexia Interactive, Path Intelligence, Radius Networks, ReadMe Systems, SOLOMO and Turnstyle Solutions.

While the site could help alleviate some of the concern around location tracking, it does not cover all of the tracking that is taking place.

?As we work through the policies and the technologies, it is clear that there are other types of technologies that are also being used for different kinds of location tracking,? said Jules Polonetsky, director and co-chair of the Future of Privacy Forum, Washington. ?Some of those are already covered by different industry standards, the DAA and NAI have rules around location and ads, for instance.

?But it is also clear that there are some kinds of tracking that are very new that might be very similar,? he said. ?There is tracking being done using magnetic fields, there is tracking being done using LED lighting, there is tracking being down counting heads in video.

?We will at some point take a look at the other kinds of technology that are really being used in the same [way] to figure out what sorts of privacy rules should exist for those.?

The companies participating in the site have agreed to no longer associate information about an opted-out consumer?s presence at a location with a MAC address. These companies will only use that MAC address to maintain the device?s opt-out status.

The opt-out site went live on Feb. 18, and companies will begin processing opt-outs within 30 days.

?It?s certainly a step in the right direction, providing a single place for consumers to opt-out,? ABI Research?s Mr. Connolly said. ?It is worth pointing out that it doesn?t cover all indoor location technologies and it is unclear if it covers all use cases.

?From an industry perspective, initiatives like this help to keep hysteria in check,? he said. ?There is a huge risk that the media will blow this potential privacy threat completely out of the water, or for a government official to see a chance to make a name for themselves.

?The reality is that customer location analytics is far less intrusive than a lot of loyalty card or rewards programs that exist today.?

Final Take
Chantal Tode is associate editor on Mobile Marketer, New York