FTC Settles Privacy Policy Violation Charges With Retail Tracking Company

2012, Nomi Technologies promised in its privacy policy to “provide an opt-out mechanism at stores using its services,” the release said. “This promise implied that consumers would be informed when stores were using Nomi’s tracking technology” to track the MAC address, device type, data and time the device was observed and signal strength of the device, the FTC said. But these promises weren't kept, the FTC alleged in its first-ever complaint against a retail tracking company, because “no in-store opt-out mechanism was available, and consumers were not informed when the tracking was taking place,” the FTC said. “Nomi collected information on about nine million mobile devices within the first nine months of 2013,” the FTC said. “It’s vital that companies keep their privacy promises to consumers when working with emerging technologies, just as it is in any other context,” said Director of the FTC’s Consumer Protection Bureau Jessica Rich. “If you tell a consumer that they will have choices about their privacy, you should make sure all of those choices are actually available to them,” Rich said. With its tracking technology, Nomi provided aggregated information on how many consumers passed by a store instead of going in, how long consumers stayed in the store, the types of devices used by consumers, how many repeat consumers a store had and whether the consumer had visited that store at another location, the FTC said. While the company provided an opt-out on its website, “consumers were not informed of the tracking taking place in the stores at all,” the FTC said. Under the settlement, 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,” the FTC said. The Commission voted 3-2 to issue the complaint and accept the proposed consent order, with Commissioners Maureen Ohlhausen and Joshua Wright dissenting, the FTC said. Chairwoman Edith Ramirez and Commissioners Julie Brill and Terrell McSweeny issued a joint statement in favor of the order, Ohlhausen and Wright issued separate dissenting statements. Comments on the consent agreement will be accepted through May 25, after which the Commission will vote whether to make the order final. “We continually review our privacy policies to ensure that they follow best practices and had already made the recommended changes in pursuit of that goal by updating our privacy policy over a year and a half ago, while we were still an early-stage startup that was less than a year old,” a Nomi spokesman said in a statement emailed to us. “Our mission has always been to help clients deliver the best possible customer experience, and a key part of achieving that goal is empowering consumers with choice,” the spokesman said. Ohlhausen noted in her dissent that Nomi is a “young company that attempted to go above and beyond its legal obligation to protect consumers but, in doing so, erred without benefitting itself,” he said. “Commissioner Wright believes that Nomi did not violate the FTC Act,” the spokesman said.