Stalking Us as We Shop: HP’s New Smartshopper App

Posted in: Consumer Law

Hewlett Packard has unveiled a new mobile application (“app”) that retailers can use to trail people as they shop in order to send them targeted ads and promotions. The iOS mobile app called SmartShopper was unveiled at the Interop conference in Las Vegas at the end of March. It is being promoted by HP’s CEO Meg Whitman as a way for retailers to monetize their networks, and as a way to build “tighter relationships with their customers.”

The app has the ability to send location-based offers to customers’ iPhones in real time. It does this by tracking where shoppers are at any moment. As a result, it is being touted by privacy advocates as the newest “stalker” app—because it can trail us wherever we go. This is not the first time that so-called stalker apps have been in the news,with critics deeming them to be intrusive of consumer privacy.

In this column, I will look at two more recent examples of so-called stalker-shopper apps, and also at legislative attempts to address these new ways of tracking our movement and behavior. At the moment, there is nothing illegal about these apps—but the lack of transparency about what happens to data collected about us gives rise to many open questions that deserve answers.

SmartShopper Unveiled

A recent HP video clip that was posted online that shows how the Smartshopper app works. HP tells retailers: “Imagine reaching your customers with the right offer, and the right moment in the right place.”

The video clip is revealing, as it shows fake customer profiles that are quite detailed. There is “Julia,” a woman who likes running shoes and shoe shopping, is a high online spender, and recently had a baby. Then there is “John,” a contractor who likes beer, wine, and skiing and does not buy online. These profiles are intimate: They know who we are, and what we like and do. These customers are at the “Great Mall” in the video, and based on their location, retailers can send them online offers immediately. John, for example, is given a coupon for happy hour wine shopping.

SmartShopper is integrated with HP’s Location Aware Software Defined Network (SDN) application, also unveiled today, which is powered by technology developed at HP Labs, the company’s central research arm.

Dominic Wilde, a VP within HP’s Networking Division has boasted about the accuracy of SmartShopper: “It has very accurate location capabilities so that we can identify a device down to 2m, which is 60 percent better than anything else on the market today. In best case, even down to 1m.” This is like having someone snooping on you in very close proximity.

How will retailers identify one of us as a Smartshopper? SmartShopper is designed to lure customers, via their smartphones, to products and services that they are interested in through the merger of geolocation data with real time analytics. According to Wilde, SmartShopper merges your location with other servers that map out the location of items throughout a mall or store,while tapping into big data analytics about individual consumers.

In other words, HP’s app will be able to merge your location, your consumer profile, and the data about what in a nearby store should be attractive to you. Retailers will have the ability to cross-check consumers’ current location with their buying history, based on information gathered from the use of a rewards card, or from other existing customer databases. The system can then use that data to nudge a shopper toward a sale he or she might be interested in, by sending them a coupon while they shop. HP reports that it is in discussions with a number of retailers that are interested in using the app.

HP is not the first company to offer up location-based tracking services to market products to consumers as they shop and wander around stores. I discussed some of these in a previous column. In some situations, retailers like Nordstrom directly tracked consumer movements via a Wi-Fi network to serve up offers depending on a shopper’s location. Such attempts to track consumers based upon their location, were cruder, however, and did not necessarily merge a consumer’s buying patterns and other data with their movements in a store. HP’s app works across retailers, and allows for more data analysis and aggregation.

Renew’s Recycling Debacle

Of course, customers can always choose not to download an app like Smartshopper. But the fact remains that a customer may be entranced by the offer of discounts, and thus will download a free app—without knowing about the profiles that advertising firms partnering with HP will collect,and then sell to other persons, etc. It is unclear what privacy safeguards will be put in place, and so it may be that HP not only makes money by working with retailers and advertisers, but will also profit from our data being collected, melded together, and sold.

When consumers do find out about location tracking,they can get annoyed or disturbed ,depending on the nature of the tracking. Last August, a company called Renew was asked to discontinue its location tracking via recycling bins in London’s “City”—its financial district. Recycling bins were installed that monitored the cell phones of passers-by, so advertisers could serve up targeted messages to people whom the bins recognized.

Renew, the company behind the scheme, equipped about a dozen recycling bins with technology that could track smartphones. The bins recorded a unique identification number, known as a MAC (media access control) address, for any nearby phones and other devices that had Wi-Fi enabled. Renew could then determine if the person walking by was the same one from yesterday, and even track the pedestrian’s daily route down the street, and how fast he or she walked. This might allow Renew to determine where they stopped to browse or buy a coffee.

According to The Daily Telegraph, after privacy advocates expressed concern and shock, the City of London asked Renew to stop its pilot, and referred the case to the British Information Commissioner’s Office (ICO), the national privacy watchdog.

 Disclosure and Transparency as a Way Forward?

Consumers need to be aware of the fact that the minute that an app is downloaded, there is always a chance that it leads to the potential for tracking, and also monitoring of consumer patterns and behavior. So it’s good for us to push to know what data is being tracked and how it is used by business. In the end, we—or some of us—may feel that it’s just fine for folks to know what we do.

But what if we are purchasing items that are private, such as items in adult bookstores, or medical marijuana from a dispensary. Will the tracking be so ubiquitous that an app ultimately takes over our life and records it in a database? This is the consequence that consumers need to consider. And what happens when you lend your phone to a friend or relative—will their movements be interpreted as yours—such that someone else’s habits influence your own profile?

Privacy advocates worry not about how data is initially collected for providing coupons but about knock-on effects. Will the more robust compilation of data based on tracking us daily lead to profiles that reveal our innermost secrets, and information that can be used to discriminate against different communities—excluding some populations from particular opportunities. And there is no sense that we would be able to correct anything compiled about us that is wrong. Our hypothetical Julia and John in HP’s world may actually not be as described but won’t be able to challenge their profile.

In 2012, Senator Al Franken introduced a bill to ban so-called “stalking apps,” hidden programs that others can use to track the location of victims by surreptitiously using smartphone relocation data. (I discussed this in a prior column as well). The term stalker apps has been used in two ways—one to deal with apps that may be installed by a boss, spouse, lover, or parent on another relative’s phone to track someone’s movements covertly. These apps have names such as “Is He Cheating?” Senator Franken’s legislation would ban such apps, which give domestic violence advocates heartburn.

The second use of the term refers to the shopper and other geolocation apps that monitor consumer movements. Franken reintroduced his bill in 2014, with some modifications, but never sought to ban apps like SmartsShopper. “Tens of millions of Americans have smartphones now,” said Sen. Franken. “And the companies that make the software on your phone, including apps, can track your location at any time. I believe that Americans have the right to control who can collect their location, and whether or not it can be given to third parties. But right now, companies—some legitimate, some not—are collecting your location and giving it to whomever they want.”

 The Location Privacy Protection Act of 2014 is meant to close legal loopholes that allow stalking applications to exist on smartphones. Sen. Franken’s bill would address this problem by requiring all companies to get customers’ permission before collecting their location data or sharing it with third parties. It also contains targeted provisions to ban the more nefarious stalking apps.

Would SmartShopper be covered by Senator Franken’s legislation? The answer is “Maybe.” Of course, if it is an app, consumers would have to download it and so would have to consent to tracking—but if it comes bundled with other apps as part of a cell phone package, that might be different. And then it’s not so much that a consumer is being tracked—but how they are being tracked, and how that data is being used, that really matters.

According to Senator Franken’s bill summary, his new legislation would “Require that any company that collects the location data of 1,000 or more devices publicly disclose the data they’re collecting, what they do with it, who they share it with, and how people can stop that collection or sharing.”

And that’s the crux of the matter: whether by industry initiative or by regulation, HP and other companies that are trying to monetize our lifestyles and habits need to divulge more about what exactly they will track, when, and then what it is they know about us.