Evan Schuman's StorefrontBacktalk

Maybe using mobile phone signals to track customers isn’t looking so sweet after all. On Monday (Nov. 28), two U.S. shopping malls said they stopped using a people-tracking system that used mobile signals, after the malls’ developer got letters from U.S. Sen. Charles Schumer (D-NY), who threatened to call in the Federal Trade Commission to investigate the privacy issues. That’s despite the fact that the system is designed to be anonymous—and the system’s legality is untested.

There are some ironies in all this. One is that, with all the genuinely invasive customer-tracking technologies online and even in malls, the mobile signals used in this one really are anonymous to everyone but the mobile phone operators. Another is that if the system were actually targeting individual customers and the data were used by store associates, it might actually be more palatable to shoppers. After all, when location data is anonymously collected, it feels creepy. But when an associate knows you’ve already been to Wet Seal and Nordstrom, that just means she knows your tastes and can serve you better—or at least it feels that way.

The uproar is over the FootPath system from U.K. vendor Path Intelligence, which began use on Black Friday in the two malls: Promenade Temecula (halfway between Los Angeles and San Diego) and Short Pump Town Center in Richmond, Va. The owner of both malls said it received letters from Schumer (fortuitously, just after Black Friday) warning about the FTC investigation.

In a statement, Schumer said, “A shopper’s personal cell phone should not be used by a third party as a tracking device by retailers who are seeking to determine holiday shopping patterns. Personal cell phones are just that—personal. If retailers want to tap into your phone to see what your shopping patterns are, they can ask you for your permission to do so. It shouldn’t be up to the consumer to turn their cell phone off when they walk into the mall to ensure they aren’t being virtually tailed.”

Of course, third-parties Apple and Google routinely track phone users’ locations in detail for location-based services. (Google just announced a service that tracks each Android user’s location to within a few meters inside stores, shopping malls and airports.) Other third-party app developers have also been accused of tapping into smartphone geolocation data in real time without making it clear to the user exactly what’s being tracked—even if users have nominally given permission via a click-through license agreement when the app is installed.

Sorry, senator, but requiring an opt-in for location tracking is no defense of privacy, at least as long as nobody actually reads those click-through licenses.

Then there are the legal questions.