Retailers Snooping on Holiday Shoppers Raises Privacy Concerns

Dec. 10, 2013 -- Only Santa, maybe, knows if you've been naughty or nice. But management at some 1,000 retailers this holiday season knows where you've been standing, how long you've had to wait in the checkout line, and which sweater or necktie or shovel you admired most while shopping.

New technologies for tracking shoppers in-store, in real time, make this possible. Some rely on signals emitted by customers' smart phones. Another uses images from store security cameras.

Prism Skylabs' technology analyzes security camera images to give retailers "heat maps," on which hot colors such as red or orange denote the items customers are finding most desirable. The colors are determined, say, by how long a customer has stood in front of an item or how many times the item has been handled.

Jules Polonetsky, executive director of the Future of Privacy Forum, a think tank in Washington, D.C., tells ABC News that the past few years have seen more retailers adopt customer-tracking technology. Everyone from malls to big-box vendors to small coffee shops is testing some sort of system, he says. He thinks the situation has reached a turning point this shopping season with Apple's introduction of customer location-sensing iBeacon technology, which can send a variety of information—including details on products, special offers and events—to shoppers standing near new iBeacon transmitters.

Whether a tracking technology qualifies as "creepy" (Polonetsky's word) depends in large part, he says, on whether data is being collected on specific individuals, rather than on unidentified customers en masse. Prism's heat maps fall into the second category.

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Steve Russell, Prisms' founder and CEO, says tracking systems that use cell phones to match data to individuals are invasive. "We're an alternative to that," he says. Once the security camera pictures have been analyzed to produce heat maps, he says, all visual trace of consumers is expunged. All that's left is an abstraction of how customers as a group have spent their time shopping.

"Before, a merchant could only look at the register to see what was selling," says Russell. "Now, you can see what products shoppers are spending time with. If somebody is picking something up and playing with it but not buying it, that tells the retailer the item may be overpriced. In the past, merchandising decisions typically have been made based on a merchant's gut feeling. Here's a way to make them based on data."

Shoppers often have no inkling they're being tracked by Prism. Nordstrom says it tested a technology called Euclid between September 2012 and May 2013. The system tracked customers using the Wi-Fi signals of customers' smart phones. "Using this type of technology," said Nordstrom in a statement at the end of the test, "is one way we can learn about our customers' foot traffic and find additional opportunities to improve the service we offer them. Through the Euclid test we got some great feedback from our customers."

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