Instead of asking hundreds of questions to respondents over a series of surveys to tease out their preferences and interests when visiting an Acme Retail Store, why not just track their real-world behavior once they get there? A growing number of research and analytics companies are doing just that. Unfortunately, the cutting edge in utilizing advanced technology for real world marketing research has attracted displeasure from Congress for its impact on consumer privacy and consumer choice.

Senator Al Franken (D-MN), Chairman of the Judiciary Committee's Subcommittee on Privacy, has been investigating analytics company Euclid this year for its shopper tracking technology. Sen. Franken expressed incredulity that companies would "track consumers' movements without their permission as they shop, especially when someone doesn't buy anything or even enter a store. People have a fundamental right to privacy, and I think neglecting to ask consumers for their permission to track them violates that right."

Consumers interviewed by a local Denver TV news network about shopper tracking echoed Sen. Franken: "I feel like it's an invasion of my privacy." Some retail chains responded to the bad publicity by pulling the Euclid technology from their stores.

Sen. Franken explained how Euclid's shopper tracking works in his March correspondence:

As I understand it, your company's technology can track consumers as they walk past a store, enter a store, or move between its floors by tracking a permanent and unique hardware number transmitted by those consumers' smartphones. This tracking occurs on an opt-out basis: unless someone visits your website and enters her information, Euclid's technology will track her. Recent news reports suggest that Euclid's technology has tracked 50 million unique smartphones or other WiFi-enabled devices. All of this would suggest that the movements of millions of Americans have been tracked in your clients' stores without those consumers' permission.

Euclid's approach is comparable to another recent shopper tracking entrant, YFind Technologies, which uses a WiFi-based indoor positioning set-up to "track the movement of individuals indoors" to provide "footfall analytics."

Outrage over this kind of shopper tracking is not actually new. Rep. Jose Serrano (D-NY) has pursued legislation in response to a marketing research mini-scandal in 2011. Path Intelligence launched a survey on Black Friday 2011 in two malls in the U.S., tracking shoppers' movements by monitoring the signals from their cell phones. It was intended to last through New Year's Day, but after intervention from Senator Chuck Schumer (D-NY), the study was stopped. The technology used antennas set up around the shopping centers to anonymously track shoppers as they moved from store to store. This kind of research has been going on in Britain for a while. Customers were notified of the survey via small signs, and the only way for them to opt out was to turn their phones off.

Euclid's CEO Will Smith responded to Sen. Franken's questioning by noting that, "Euclid cannot and never will receive any information relating to names, addresses, phone numbers, emails, etc. That information is not on our servers and therefore is never at risk for breach." However, he offered several promises to improve Euclid's privacy practices, such as:

  • Requiring all participating retailers to post signage telling consumers how to opt-out of tracking;
  • Requiring all retailers to undergo a comprehensive education program about the opt-out process; and
  • Strengthening the company's privacy policy to prohibit the sale, rental, or disclosure of any of Euclid’s data to data brokers.

MRA's view
The Marketing Research Association (MRA) agrees with Sen. Franken that shopper tracking poses a problem for consumer privacy and choice; we differ on how to solve the problem.

Sen. Franken still remains unsatisfied with Euclid because of a fundamental difference in their consumer privacy choice philosophies. He believes in opt-in rather than Euclid's opt-out solution. This has been a common theme in MRA's dealings with Sen. Franken's office and the Senate Judiciary Committee on his Location Privacy Protection Act, which he intends to re-introduce later this year. Similar fights have bubbled to the surface during the ongoing meetings in the NTIA multistakeholder process for mobile apps privacy.

MRA has taken the position for several years that location privacy in such circumstances demands a workable opt-opt with fair and appropriate transparency of the tracking activity (while opt-in should be pursued as a research profession best practice). In pursuing a workable opt-out, we have specifically rejected the approach of Path Intelligence, where the only means to end the tracking was for consumers to turn off their cellular devices. There are likely steps that can be taken to make the shopper tracking more transparent to consumers and ways to make the opt-out easier, such as prominent QR codes for consumers to scan with their mobile phones and notifications with one-step opt-out instructions delivered directly to consumers' cell phones.

What can MR do to head off such privacy pratfalls?
Battles over the privacy impact of emerging technology in survey, opinion and marketing research look likely to stick around. What can research professionals do about them?

"Privacy by design," a key theme emanating from the Federal Trade Commission (FTC) in their enforcement activity, as well as last year's Privacy Report (and echoed by the California Attorney General's office in discussion of mobile privacy), calls for dealing with potential privacy problems during the development process for new services or technologies, long before they are ever rolled out to the public. Researchers should consider privacy concerns from the beginning of the development process. Otherwise, a few companies could ruin the emerging technology party for everyone else.