The Miami Herald reports that many retailers have the ability to track customers using signals sent out by their customers’ smart phones. This is possible by tracking a unique identifier of the device, what is called the “MAC” address. The MAC address is automatically transmitted by the phone as a probe to search for Wi Fi signals or Bluetooth signals for the phone to sync into. Using sensors the store can detect the phone’s precise location in the store. The sensors cannot determine the individual’s name or address of the customer, only the fact that a smartphone is present.

Why Track Customers?

Businesses employing the tactic thus far report interest in using smartphone locations to help personalize and improve the customer experience, as well as learning when and how each customer shops in their store. The technology can determine which items a customer views as well as how long a customer has to wait in the check-out line.

Retailers may use this data to improve the customer experience by generating unique customer loyalty programs and to maximize the design of their store’s layouts. Some retailers with brick-and-mortar store fronts are already using various marketing strategies to influence consumers’ choices based on their travel patterns within the store. Businesses can move products around the store to make the customers’ experience more pleasant or to push certain products over others.

Retailers have expanded the use of these sensors dramatically. In 2013, the number of stores using the smartphone sensors grew eight times over the number of stores in 2012 according to one sensor manufacturer, ilnisde.

Major cell phone providers, such as AT&T, Sprint, and Verizon, also use this location data. The cell phone providers use the information for forwarding specific advertisements to users based on their location. The providers also use the data to compile reports for marketing purposes about trends of smartphone users, such as what apps users tend to use in a given location.

Should These Be Regulated?

Some privacy experts argue that these uses should be reined in and regulated by the government to protect the privacy of cell phone users. The Federal Trade Commission is looking into this issue to determine what, if any, action the Commission should take to regulate this activity.

To preempt federal regulation, some proponents of the sensors are promoting a voluntary opt-out program for smartphone owners to use if they want to avoid being tracked by the smartphone sensors.

Other than relying on the opt-out above, there are basically two ways to avoid the tracking sensors that various companies use. Either smartphone users can shut off their Wi Fi and Bluetooth functions which would make the phones impossible to track. Or consumers could completely turn off their phones. Naturally, neither of these are likely to be particularly appealing to smartphone users who want to have access to their advanced devices while in stores.

Balancing Consumer Privacy and Good Business Practices

As this issue demonstrates, business owners today must balance many complex issues related to technology and privacy. If you have more questions about how to take advantaged of advanced marketing and targeting materials without running afoul of the law please contact the business law professionals at the Campbell Law Group.