Location-based services: Controversy at every level

Like it or not, commerce increasingly involves keeping tabs on the customer's location.

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The obvious pro-privacy move of turning off the phone's Wi-Fi and Bluetooth facilities assumes the owner knows how. Meanwhile, turning off Wi-Fi may inhibit the owner's ability to make calls from inside large stores, notes Schuman.

Roeding says Shopkick protects customer privacy because it, not the retailer, interfaces with the customer and hands out the loyalty points. "We don't supply any names, only aggregate numbers," he says.

Hunter says that special features of Qualcomm's BLE beacon promote privacy by emphasizing the need to opt in, and for transparency. After opting in, users can turn off selected features, or opt out entirely and even erase all data about them that has been collected on the device, and do it easily, he claims.

Shopping cart with tracker
Fujitsu's "U-Scan shopper," shown at a trade show in 2005, allows customers to view uploaded shopping lists, check prices and locate items in stores. The monitors also allow retailers to offer loyalty incentives and personalized advertising based on individual shoppers' profiles. REUTERS/Tim Wimborne

Schuman is not impressed. "If you use your phone to make a payment they will know who you are every time you walk in until you get a new phone," he notes. "They can pull your history. If you were fond of red sweaters, an associate can approach you and mention a 17% sale on red sweaters. What a coincidence!"

Beyond that, Schuman says the ultimate goal of in-store tracking is differential pricing, based on an ability to identify individual shoppers combined with accumulated information about their backgrounds. Price tags will be dispensed with, and customers will swipe a product's bar code and be given a price derived from various factors including their "price sensitivity" (i.e., their known spending habits combined with their presumed income level).

"You may be shown a higher price, because you are less price sensitive, while the next person may get a deep discount since they know that person will not buy it otherwise," Schuman predicts.

Analyst Golvin disagrees. "I would be surprised at any attempt at that kind of approach -- after all, they [the customers] are walking around with a very powerful communication tool that can provide price transparency."

In other words, there is nothing stopping customers from checking prices elsewhere.

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