The Federal Trade Commission reached a non-monetary settlement with Nomi Technologies based on a complaint that the firm helped retailers track millions of customers via their mobile phones.
“Nomi will be prohibited from misrepresenting consumers’ options for controlling whether information is collected, used, disclosed or shared about them or their computers or other devices, as well as the extent to which consumers will be notified about information practices,” according to the FTC.
Nomi provided retailers a way to locate customers by placing sensors in stores to track a device’s 12-digit media access control address. Nomi marketed its service as a way to collect meta data on customer movements in stores in order to increase sales through strategic placement.
The complaint against Nomi had originally alleged that the company had misled consumers in saying it would provide an in-store opt out option and alert customers when they were being tracked. The FTC investigation found that in 2013, 45 stores used Nomi’s MAC technology to track 9 million individuals.
“The complaint alleges that Nomi tracked consumers both inside and outside their clients’ stores, tracking the MAC address, device type, date and time the device was observed, and signal strength of consumers’ devices,” the FTC noted. “In reports to clients, Nomi provided aggregated information on how many consumers passed by the store instead of entering, how long consumers stayed in the store, the types of devices used by consumers, how many repeat customers enter a store in a given period and how many customers had visited another location in a particular chain of stores.”
The company’s privacy policy said that it “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.”
While the company did provide an opt-out on its website, the complaint alleges that no such option was available at retailers using the service, and that consumers were not informed of the tracking taking place in the stores at all.
Under the terms of the settlement with the FTC Nomi is now prohibited from “misrepresenting consumers’ options for controlling whether information is collected, used, disclosed or shared.”
The FTC voted to accept the settlement 3-2 with both of the commission’s Republican members dissenting. The GOP commissioners argued that the tracking practice had not actually harmed the customers.
