Retailers Snooping on Holiday Shoppers Raises Privacy Concerns

That feedback, says Polonetsky, was not all positive. "Even though Nordstrom had put signs up saying there was a test being conducted, some consumers said, 'Huh?'" They did not take kindly to being monitored and used social media to complain, says Polonetsky. Others complained directly to the store itself. Nordstrom, asked by ABC News about negative feedback, had no comment.

This fall, the Future of Privacy Forum joined forces with Sen. Charles Schumer and a group of suppliers of tracking technology to try to hammer out a code-of-conduct agreement that would protect shoppers from the involuntary invasion of their privacy, while, at the same time, allowing merchants to collect data supplied voluntarily.

The code requires merchants using such technology to display clear, in-store signage that tracking technology is being used. It further requires them to tell customers how they can opt-out of tracking altogether.

Depending on what the customer wants, says Polonetsky, and on what up-front disclosures are made by merchants, these technologies have the potential either to leave the shopper feeling flattered ("Gee, they know my shoe size!" he says, receiving a customized offer on his phone while walking through the shoe department) or feeling as if they've entered some negative, Matrix-like environment.

Still, all those smartphones can ease the holiday tension too.

This holiday shopping season, at some malls operated by Forest City, shoppers wanting to be photographed with Santa won't have to wait in line, according to the company. They will have the option of waiting in a virtual Santa queue and being "pinged" on their phones when the jolly old elf is ready to receive them.

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