Is your business breaking into the latest mobile device tracking technologies? If so, remember that the FTC Act still applies. Your business’ basic legal obligation to keep its promises is just as important when using emerging technologies as it is in other contexts.
That’s the lesson in the FTC’s case against Nomi Technologies, a New York-based company that provides tracking services to retailers. How does the tracking work? Nomi places sensors in its clients' stores, which track customer traffic patterns by picking up on customers' mobile phone signals.
Nomi uses the data it collects to provide reports to its clients with information like the percentage of consumers passing by the store versus entering the store, the average length of time the consumer spends in the store, the percentage of repeat customers, and the number of customers who also visited another location of the client's chain.
Nomi made a specific, express promise about how, when and where consumers could opt out of tracking.
So where did Nomi fall short? Nomi did offer an opt-out mechanism on site, but didn't do so in the retail stores using its technology. In fact, since Nomi didn’t require its retailers to give notice to consumers that they were using Nomi’s tracking technology, consumers wouldn’t even know they were being tracked.
The FTC’s two-count complaint is relatively straight-forward. It alleges that Nomi violated the FTC Act by misrepresenting that: (1) consumers could opt out of Nomi’s service at retail locations; and (2) consumers would be given notice when a retailer was using their service.
Similarly, the FTC’s settlement with Nomi has two key features. The proposed order prohibits Nomi from making future misrepresentations about consumers' ability to control use of information collected from or about them or their devices, and the extent to which Nomi will provide notice about its use of that information.
The Nomi case offers a simple, but valuable, lesson for businesses and the firms who represent them: Businesses must periodically review their privacy statements to make sure that they deliver what they promise.
- For example, the alleged misrepresentation in this case was on the company’s website for nearly a year. In the normal course of your business, you should periodically review the accuracy of the promises you make to consumers.
- In this case, Nomi’s representation that consumers could opt out online or in stores meant that Nomi should have provided a choice of opt outs – once when consumers viewed the privacy statement online, and later when shopping in stores. Businesses must make sure that all the privacy choices offered to consumers are actually available.