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Associated Press
Stores are tracking consumers’ movements through signals their smartphones emit and insist the information is secure and anonymous.

Concerns rise as stores begin tracking phones

– Should shoppers turn off their smartphones when they hit the mall? Or does having them on lead to better sales or shorter lines at the cash register?

Retailers are using mobile-based technology to track shoppers’ movements at some malls and stores. The companies collecting the information say it’s anonymous, can’t be traced to a specific person and that no one should worry about invasion of privacy.

But consumer advocates aren’t convinced. It’s spying, they say, and shoppers should be informed that their phones are being observed – and then be able to choose whether to allow it.

The Federal Trade Commission held a workshop Wednesday on the issue, part of a series of privacy seminars looking at emerging technologies and the impact on consumers.

FTC attorney Amanda Koulousias says the commission wants to better understand how companies are using phone-location technology, how robust privacy controls are and whether shoppers are notified in advance.

Your smartphone has a unique identifier code – a MAC address (for media access control) – for Wi-Fi and Bluetooth. It’s a 12-character string of letters and numbers. The numbers and letters link only to a specific phone.

When your smartphone is on, it emits signals with that MAC address as it searches for Wi-Fi or Bluetooth. Sensors in stores can read those signals to tell how often shoppers visit, how long they stay or whether they spend more time in the shoe department, children’s clothing section or sporting goods.

Companies that provide “mobile location analytics” to retailers, grocery stores, airports and others say they capture the MAC addresses of shoppers’ phones but then scramble them into different sets of numbers and letters to conceal the original addresses – a process called hashing. This is how they make the data they collect anonymous, they say.

The companies then analyze all the information those hashed numbers provide as shoppers move from store to store in a mall, or from department to department in a store. Mall managers could learn which stores are popular and which ones aren’t.

A retailer could learn how long the lines are at a certain cash register, how long people have to wait – or whether more people visit on “sale” days at a store.

“We’re in the business of helping brick-and-mortar retailers compete” with online retailers, said Jim Riesenbach, CEO of California-based iInside, a mobile location analytics company. “The retailers want to do the right thing because they know that if they violate the trust of consumers, there will be a backlash.”

Privacy advocates, though, argue that the scrambled or “hashed” MAC addresses aren’t completely secure. They can be cracked, says Seth Schoen, senior staff technologist at the Electronic Frontier Foundation. And that could reveal data that people may not want to share.

Nordstrom tried a small pilot test in 17 of its more than 250 stores in September 2012. The company posted signs at doors telling shoppers they could opt out by turning off their Wi-Fi. Nordstrom ended the trial in May 2013 after some customers complained, saying they felt uncomfortable, spokeswoman Brooke White said.

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