Schumer Urges Retailers, Location Tech Companies To Address Privacy Issues

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With smartphone adoption nearing ubiquity, the lines between our online and offline worlds have blurred, reigniting long-standing concerns over privacy and the web. During a speech at the Street Fight Summit in New York Friday, Senator Charles E. Schumer of New York spoke about his role in developing a new privacy code of conduct for the location analytics industry, and the need for consumer advocates, technology companies and retailers to come together and proactively address the issue.

“There is always a collision between helping people make choices and giving them the information they want, and privacy,” he said. “As the [Internet] grows, expands, and becomes more important, that’s something we have to deal with.”

Earlier this week, the senator, in conjunction with the Future of Privacy Forum and a group of location analytics firms, announced a new code of conduct for location analytics technology, outlining a series of best practices that aim to ensure that consumers are aware of when they are being tracked and are capable of easily opting-out. The announcement comes two months after the senator penned a letter to FTC Chairwoman Edith Ramirez, urging the FTC to institute rules that would require retailers to notify shoppers when they are being tracked via their mobile devices.

“This is a significant step forward in the quest for consumer privacy,” he said about the agreement. “But even more importantly it shows that tech companies, retailers and consumer advocates can work together well and quickly in the name of the consumer.”

The location analytics industry has exploded in recent months, as brick-and-mortar retailers look to bring some of the big data practice common to the web to the offline world. The most common technology, implemented by companies like Euclid Analytics and the New York-based Nomi, uses the millions of interactions between our mobile phones and store’s wireless routers to measure store traffic.

As mobile devices search for nearby wireless routers, each interaction yields a small amount of data that includes, among other signals, an anonymous device ID (called a MAC address) and a measure on the strength of signal that usually gets discarded. These businesses then structure those data to give brick-and-mortar businesses quantified look into their store’s foot traffic, serving up metrics like total traffic, return traffic, and a capture rate that measures the percentage of people who walk by the store who enter.

“As you know location tracking technology holds enormous potential for marketers, and improving the consumer experience,” he said. “ But with this enormous potential for benefit comes enormous responsibility on the part of marketers because as much as consumers want an improved shopping experience, they also want to feel secure in their personal privacy.”

For retailers, testing these new technologies has proven a lesson balancing cost and benefit, measuring the long-term value of quantifying in-store behavior with the liability of potentially angering customers. In May, Nordstrom’s ended its trial with Euclid a week after a New York Times article put a spotlight on the startup, and the growing industry as a whole.

Senator Schumer, a member of the Senate Judiciary committee that oversees privacy policy, said he planned to use the agreement as a model for “other areas where we have these kinds of conflicts.”

“There’s a larger lesson here, for us on the policy-making side,” he added, closing his speech. “Often, in an effort to protect our constituents and their privacy, we jump in both in legislation and regulation. But especially in tech sphere, we need to be careful the leg desire to look out for our constituents privacy, with the need to preserve the opportunity for innovation.”

Steven Jacobs is Street Fight’s deputy editor.

For more coverage of Street Fight Summit, click here…