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April 27, 2015

Nomi Technologies Settles With FTC Following Mobile Tracking Issues

In an oddly counter-intuitive move, some reports suggest that many customers are increasingly willing to accept some snooping from businesses if it yields a better overall experience. The importance of putting customer data to use is likewise known, but there are still limits, even in an environment that seems more willing than ever to be snooped on. One of these limits was recently seen by Nomi Technologies, who reportedly settled with the Federal Trade Commission (FTC) following charges of an opt-out agreement that didn't actually allow for opting out.

The FTC's complaint noted that Nomi's guidelines offered an opt-out policy, as generally should be the case, and that the policy in turn would subsequently offer notice of where Nomi's tracking technology was being put to work such that customers could avoid having mobile devices on in those locations. But the warnings reportedly failed to materialize, and there were no in-store opt-out mechanisms on hand either. Reports suggest that Nomi allegedly collected information on roughly nine million total mobile devices, a development that's hard to miss.

Nomi's system called for a set of sensors installed in client stores, and said sensors would attempt to connect to the mobile devices that entered the shop and searched for a Wi-Fi network. Once said devices attempted the search, the sensors would collect the unique MAC address, a 12-digit number that helps identify a device, and use that information to follow the device's geographic location in the store itself. Nomi was said to “hash” these addresses before storage—and hold them for the next time a user returned—but Nomi was putting these addresses to work in tracking individuals both inside and even outside of client stores.

The ability to opt out, the FTC notes, was available online, but not in stores, and many customers weren't aware of tracking at all. But as part of the settlement, that's about to change. Now not only must the company make said options clear, but it may not restrict just how notified the customers actually are. This reportedly represents the first time that a retail tracking company has been the target of an FTC complaint.

Here we see the critical point of tracking systems; such systems must be clearly able to be not only known about but also prevented from activating should a customer prefer such to happen. It's not that customers particularly mind being tracked—reports from Edelman Insights already suggest that customers want to see businesses put that customer data to use to generate customer-specific offers and a better overall experience—but customers want to have the option of not being tracked.

With customer service a growing concern, and some businesses regarding it as a key differentiator that keeps a brick-and-mortar store alive in the face of ever-growing online competition, it's not surprising to see businesses interested in tracking software. But part of customer service is being aware of when the customer actually wants less service. Understanding the difference between “helpful” and “too helpful” will go a long way in customer service. 

Edited by Dominick Sorrentino

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