Should You Be Worried About Privacy Of Retailer Beacons?

Media Division | April 17, 2015

Americans are concerned over the news that beacons are being installed in retail stores, phone booths, and airports. These are tiny wireless devices pinging out a Bluetooth signal that can be intercepted by phones on which certain apps are running. These apps can identify the location of phone owners and send them targeted messages. Targeted advertisements are placed in a way that they reach individuals based on demographic and behavioral attributes.

Retailers are using beacons to improve service and analyze shopping behavior, for example, by understanding when foot traffic is likely to grow. They release retail apps to remind shoppers of items in their shopping list and send them customized offers. Business Insider revealed in a report that in-store beacons are the fastest-growing retail technology after mobile credit card readers. Their use is expected to grow in the future because of low-costs and quick deployment.

But the technology is also raising privacy concerns, as it can follow users and identify their location.

Beacons are a threat to privacy

The main controversy of using beacons is to engage in surveillance. As location data is used by software applications, it can also become the gateway for cyber criminals to reach individuals with malware programs, which are being developed to target the operating systems of smartphones. Man-in-the-middle attacks (cyber criminals intercepting data collected by retailers) make this a possibility. As a result, users whose location data is being tracked may not even be aware that they are welcoming malware on their devices.

The collected data facilitate hackers to create certain groups of victims. For example, shoppers who spend more or buy expensive items in a retail outlet will be more attractive for cyber criminals than individuals who spend less or buy mid-range items. Last year, there were several cases of high-net worth individuals being targeted. How do you think hackers know who to target? Of course, by obtaining information about individuals and their behavior patterns.

Many shoppers who use smartphones to buy items agree with the terms and conditions presented to them by retail apps, and a majority of them do so without going through this information. According to Pew Research, 52 percent of US residents don’t know what a privacy policy is, so they aren’t likely to read that the beacon is going to collect their private data and may pass the gathered information and location to third parties who send targeted messages and offers. Because the user accepts terms and conditions, such advertisements are not considered unlawful by any means.

What is the solution?

The first responsibility lies in the hands of companies who are collecting user data; their applications should ask users for their consent before they can track information. Next, the US government should step in to make some policies related to this issue. In the European Union, for example, websites need to ask users if they accept the cookie policy before installing cookies on their PCs. And users are presented with a pop-up on the main page.

Retail mobile apps can be obliged to use something similar when collecting location information, so shoppers can be aware of the fact that their location data is being tracked.

Users downloading and using these retail apps can take the following measures:

  • Install up-to-date security software
  • Read terms and conditions
  • Turn off Bluetooth if their mobile has been infected
  • Avoid downloading of suspicious programs

Joint efforts of users and governments and app developers can significantly reduce the risk of unlawful surveillance as well as promote beacons as technology that doesn’t have privacy implications.

Massive's Media Division publishes timely news and insights based on current events, trends, and actionable cross-industry expertise.