Malls to halt tracking of customers via cell phone as senator steps in

Two malls that had previously planned to track the movements of patrons through their cell phones have announced they have halted the program, after receiving a phone call from a U.S. senator expressing privacy concerns.

The malls, the Promenade Temecula in southern California and Short Pump Town Center in Richmond, Va., are both owned by mall management company Forest City Commercial Management. They had planned to run the tracking program from Black Friday through New Year's Day, but a phone call from the office of Sen. Charles Schumer (D-NY) put an end to it --- for now.

The technology used antennas set up around the malls to track shoppers --- anonymously --- as they moved from store to store. Mall visitors were informed of the program via small signs, but the only way for customers to opt-out was to for them to turn their cell phones off, which is this day and age is not something most folks would want to do, even to protect their own privacy.

Privacy experts weighing in on the issue said that customers should have been given the ability to opt-in, rather than opt-out. Schmumer agreed, and said so at a press conference on Sunday.

In a statement, he added, "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."

That's not the end of it. Schumer sent letters to Path Intelligence, the U.K-based manufacturer of the FootPath Technology, as well as to FTC Chairman Jon Leibowitz. Schumer said he wanted the the FTC to determine if the technology is legal under U.S. privacy law.

Forest City Commercial Management did manage to track shopper data on Black Friday. Going forward, the company said it plans to institute an easier, though still undetermined, opt-out system for consumers. The company said, "We have temporarily suspended further trial of the technology while we work with the system developer on possible enhancements, and in deference to concerns raised by Senator Schumer. We look forward to meeting with the senator and his staff, together with the system developer, to further explore his concerns."

Still, an opt-out policy is precisely the reverse of what it should be. The best option for consumer privacy is for the policy to be opt-in, instead.

Black Friday marked the first use of FootPath Technology in the United States. However, it has already been used in Europe and Australia, with very little backlash, according to Sharon Biggar, CEO of Path Intelligence. U.S. retailers, including J.C. Penney and Home Depot (HD, Fortune 500) have also considered using the technology, she said.