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Legal to Track Customers via In-Store WiFi?

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By Brett Snider, Esq. on July 17, 2013 12:18 PM

While online stores like Amazon use cookies and past purchases to determine your browsing and purchasing habits, some brick-and-mortar stores are now using in-store WiFi to track customers' physical movements.

Big department stores like Nordstrom are using their free in-store WiFi to gather data about "shoppers' behavior and moods" by tracking their movements inside the store, reports The New York Times. The data is then used to modify in-store layouts and to offer customized coupons, according to the report.

Still, there has been a good deal of consumer backlash, and many have been left wondering if it is legal for any business -- big or small -- to track their customers.

Giving Customers Notice

While business owners certainly need to give their employees a written reminder of anti-harassment policies and federal workplace protections, it is unclear that a policy of using WiFi tracking data needs to be posted.

Nordstrom's WiFi tracking experiment began in the fall of 2012, but it attracted the ire of customers once the department store posted "a sign telling customers it was tracking them," reports the Times.

Posting company policies in plain view, especially the right to refuse service, may be a nice heads-up to your customers. But generally, a store policy that's legal doesn't have to be posted to give customers notice unless mandated by state or federal law.

Is Tracking Customers Legal?

While tracking customers via WiFi may seem like a smaller-scale version of an NSA data surveillance program, private companies are legally allowed to track customers within the four walls of their own places of business.

Just like a loss-prevention officer might follow customers' movements and behaviors to prevent theft, a business owner may choose to track smartphones that connect to WiFi because the customer has no reasonable expectation of privacy in their physical location.

However, tracking technology that might track a customer's location outside a business and into their homes may be illegally intruding on a customer's right to privacy.

Mollifying Privacy Worries

Critics of an in-store WiFi tracking system would point out that the government needs a warrant in order to track a person's location, or even their car. But a private business is not violating Fourth Amendment rights when it tracks customers.

Small businesses may seek to pacify customers who are worried about their privacy by providing them an outlet to voice their concerns, either online or via phone, and reminding customers before connecting to in-store WiFi that they are agreeing to be tracked.

A customer Bill of Rights may also be of help, informing customers of information that your business cannot request from them, like ZIP codes in some states, and how your company takes steps to safeguard customer personal information.

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