My phone at your service

Washington, DC - What is the latest technology related to loyalty programs and in-store purchases? Your mobile phone. As you carry your phone throughout the day, it is constantly emitting wireless probes to find local networks with which to connect. These probes, more formally known as “probe requests”, include a unique number - called a media access control address or “MAC address” (having nothing to do with Apple Inc).

Manufacturers install unique MAC addresses in each phone during fabrication. Anyone can setup wireless sensors to record the appearance of your phone’s probes to track where you are and where you have been –say, where you are when you're ambling through store or mall, or when you're walking or driving down a street. Some retail stores are experimenting with this technology to track your whereabouts. Stores currently use loyalty programs to link your purchases together. By tracking your MAC address, stores can also learn your shopping and in-store browsing patterns, even if you do not sign-up for a loyalty program or make a purchase. Therefore, the time seems ripe to brainstorm on the best integration of technology, policy and business that maximizes benefits to stores and consumers while minimizing potential harms.

Retailers could use the technology to modernize their loyalty programs so that your phone's probes replace the assortment of tokens and cards you may currently carry to earn discounts and rewards. Or, because your phone's probes are freely available, stores could just use them to learn more about your shopping habits to improve store layout. As one proposal posits, if you don’t want to be tracked, you can turn off your phone while shopping, or enter your phone’s information in a “do not track” registry.

Under this proposal, you would not have the option of signing up like you do with a loyalty program nor would you necessarily receive discounts or rewards. Of course, countervailing technologies exist that can change a phone’s MAC address to made-up aliases and that can cease probing while shopping.

The key stakeholders are consumers, brick and mortar retailers, and mobile analytics companies. Consumers and retailers already engage in loyalty programs and retailers want to learn more about consumer shopping habits using mobile location tracking technology offered by mobile analytics companies. Negative impacts may occur when a MAC address relates to you by name.

Where are possible “sweet spots” –those arrangements where consumers and retailers can enjoy benefits without adverse consequences? Perhaps you will construct a solution, comment below, or attend the FTC Mobile Device Tracking seminar on February 19.

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