

A smartphone displays information, also seen on the screen behind, during a Federal Trade Commission mobile tracking demonstration in February. (AP Photo/Carolyn Kaster)

As retailers increasingly use shoppers’ smartphones to track their real-world browsing habits — from the moment they set foot in a store to their journey through the aisles — a Maryland lawmaker wants to make sure people know they’re being watched.

A bill making its way through Maryland’s legislature would require stores to prominently display signs informing shoppers they’re being tracked on their phones. Think of it as a physical manifestation of the cookie notices that pop up when you’re browsing a Web site.

The practice of following people around stores through their phones has a certain “ick factor,” said Del. Sam Arora (D-Montgomery), who introduced the legislation in the Maryland General Assembly. “I’m not advocating that the practice be banned," he said. "This [bill] at least arms customers with information.”

But consumer advocates say sticking a sign on a door doesn’t address the more fundamental problem: How do you educate people about their privacy rights in the age of Big Data?

"Consumers need to know what’s behind the screen," said Jeffrey Chester, executive director at the Center for Digital Democracy, a privacy advocacy group. "Just the warning ‘We collect your data’ doesn’t tell them how it’s being used."

We know that online retailers have long collected data on shoppers. Now some brick-and-mortar retailers are playing catch-up. Many use technology that captures the unique code that a smartphone sends out when it is trying to connect to a WiFi or bluetooth network, which can then be used to check how long the person holding that phone stands in line, hovers in front of a product or moves through a store.

But the industry isn’t ready for the government to step in yet. The technology used to track shoppers inside a store is so new, retailers argue, that it’s too soon to regulate it.

“To suddenly proliferate whole bunches of new signs either for this technology or for other technology... strikes me as a bridge too far at this point,” Mallory Duncan, general counsel at the National Retail Federation, said at a Federal Trade Commission hearing in February.

And there are some downsides to telling people they’re being watched. Luxury retailer Nordstrom started tracking its customers last year. When the company posted signs notifying shoppers of the practice, it was hit with negative feedback. Customers took to social media to complain about the tracking, which Nordstrom eventually stopped.

Currently the only guidelines for mobile tracking are a set of best practices released by the Future of Privacy Forum, a Washington think tank backed by major online retailers, tech companies and banks, including Amazon, Facebook and Bank of America.

Last month, the forum announced it had established a Do Not Track-type registry that lets shoppers opt out from having their phones monitored. (Shoppers have to visit www.smartstoreprivacy.org and provide certain phone information to enable it). No major retailers have agreed to abide by the code of conduct so far, but analytics firms that run the numbers for them have. These include San Francisco’s Euclid Analytics, which ran the Nordstrom program, and Georgetown-based Radius Networks, whose clients include the Verizon Center.

But privacy advocates believe the forum's efforts don’t go far enough. Last week, the Center for Digital Democracy, the American Civil Liberties Union and other groups called on the White House to update the nation’s privacy laws.

Arora said a Maryland House committee could vote on his bill soon. The state Senate version of the bill is scheduled for a hearing March 19.

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