Yesterday evening, I found myself at the Mansion on O Street, whose eccentric interior filled with hidden doors, secret passages, and bizarrely themed rooms, seemed as good as any place to hold a privacy-related reception. The event marked the beta launch of my organization’s mobile location tracking opt-out.  Mobile location tracking, which is being implemented across the country by major retailers, fast food companies, malls, and the odd airport, first came to the public’s attention last year when Nordstrom informed its customers that it was tracking their phones in order to learn more about their shopping habits.

Today, the Federal Trade Commission hosted a morning workshop to discuss the issue, featuring representatives from analytics companies, consumer education firms, and privacy advocates. The workshop presented some of the same predictable arguments about lack of consumer awareness and ever-present worries about stifling innovation, but I think a contemporaneous conversation I had with a friend better highlights some of the privacy challenges mobile analytics presents.  Names removed to predict privacy, of course!

I mentioned the technology of physical location tracking and the opt-out mechanism, and my friend predictably wondered:

THEM:  like what aisles I go into?
…who tracks that??????

Many companies do — our opt-out covers eleven of the vendors, but you would be foolish not to think every major retailer is exploring the technology.

THEM:  what AISLES I go into?? I still don’t get how they know the aisles I go into. I guess security cameras.

When I pointed out that this tracking was done through our ubiquitous mobile devices, their response was “gross, I guess I need to turn my phone off.”  If only that were realistic!  As my friend pointed out, their ignorance reflects a broader societal unawareness of what’s happening with our data.  As the Senate Commerce Committee noted in December, data brokers have taken advantage of the fact that consumers are “conducting more and more of their daily business . . . through their mobile devices,” creating “a voluminous and unprecedented trail of data” that is easier than ever for unknown parties to “access, analyze, and share.”

My friend simply couldn’t comprehend how their mobile device could tell some entity who they were. But as was revealed by MIT researchers last year, four “data points” are all that’s needed to uniquely identify 95 percent of mobile users.  Of course, the data is still technically anonymous.  In terms of mobile location analytics, a company is just collecting a MAC address, but its a persistent identifier in the same sense as a Social Security number can be.  The bigger challenge is that so much technical innovation is about linking all of this information together.

Despite obvious criticism, the FPF opt-out is great tool. Yet the bigger challenge is that companies have yet to really demonstrate that these technologies are providing a big benefit to consumers, rather than the retailers’ bottom line.  The two may not be mutually exclusive, but I think the jury is still out.  Unfortunately, while it may seem like privacy paternalism, individual consumers cannot possibly grasp if they’re getting the benefit of the bargain when it comes to any sort of tracking, be it in-store tracking or broadly defined data brokers.

The problem is that while people broadly value “privacy,” they’re quick to give it up for minimal benefits.  My friend, who thought that stores them down aisles was gross, also wanted to ensure they would “still get couples in the mail — I want to make sure I will still get coupons.”  Certainly coupons provide my friends and all consumers with some value, but the ultimate value of coupons is as marketing communication rather than a discount.

As a society, we would be wise to make sure we’re getting value for our diminished privacy.  Obviously, most of us would take the convenience and fun of an iPhone over the fact we’re carrying around the very devices that allow everyone from our supermarket to our employers and our government to track our every move.  Maybe coupons and convenience are worth it, but is anyone really thinking about that?