Is retail use of technology violating customers’ privacy?
In our increasingly technological world, we find the latest gadgets and innovations emerging in all aspects of our daily lives. And while retailers are struggling to determine which methods are most effective in converting sales and improving loss prevention, one new practice is beginning to raise some concerns about privacy.
Specifically, the use of facial recognition software has become a useful tool not only in retail security, but also in predictive analytics by harvesting information about individual shopping patterns and behaviors. According to Computer Weekly, research by software firm CSC has found that almost 30 percent of retailers use facial recognition technology to track consumers in store. The study found that almost three-quarters of retailers track customers via technology, and that approximately one-fourth of consumers believe that the tracking contributes to a positive shopping experience.
Retail giant Walmart, in particular, is coming under scrutiny for using facial recognition software to spot thieves. The system alerts security with a profile of a suspected shoplifter (identified by facial recognition) and also delivers a corporate directive regarding appropriate response. Walmart piloted the use of the FaceFirst recognition software across stores in several states, but discontinued use after it failed to provide a positive ROI. When queried by Fortune magazine regarding the privacy implications, Walmart spokesmen had no comment.
Joe Rosenkrantz, chief executive of FaceFirst, told Fortune that the technology could “transform security at every store.”
According to the Daily Mail, some argue that using the technology is an invasion of privacy, and argue that industry has little incentive to adopt tough standards. Privacy advocates also say that governments need to pass general privacy legislation that is applicable to different technologies to keep up with the latest innovations and uses.
But there remains a legal vacuum on how to use the technology. The biggest legal question revolves around the need to provide consent or an “opt-out” option to shoppers. “The whole issue of facial recognition and biometrics has been discussed for a while, and there’s no consensus of how the privacy structure should work,” says Jeffrey Neuburger, a lawyer who heads the privacy and data security group at Proskauer in New York.
Facial recognition software is not new technology. But while it has been used primarily in law enforcement or financial cases in the past, now it has the potential to become ubiquitous, which means that many privacy advocates are pushing for the legislation to be updated to match the reality.
As Fortune explained, as the technology improves, more and more retailers are exploring how facial recognition can be used not just for loss prevention but also to identify and reward loyal customers.
For now, however, retailers and other businesses have more or less free rein to use facial recognition software, except in Illinois and Texas, where state laws limit collection of biometric data. California is also currently considering a bill that would prevent online vendors from collecting students’ biometric information, though no wider-ranging bills are in place. And no federal regulations currently exist regarding the practice.
