Private investment firm Comvest Partners acquires the financially troubled e-retailer, which filed for Chapter 11 bankruptcy protection in March.
Sens. Franken and Wyden hope the bills assuage consumer concerns.
In separate actions, two U.S. senators have introduced bills that could give consumers more control over the location data that their smartphones collect.
Sen. Al Franken, D-MN, says his Location Privacy Protection Act of 2011 would require any company that could obtain a customer’s location information to get the customer’s consent before collecting the data and Separate consent to disclose that data to other companies.
The Geolocation Privacy and Surveillance Act, introduced by Sen. Ron Wyden, D-OR, would create a legal framework for how governmental agencies could access location data and require commercial service providers to get a customer’s consent before sharing the data with others.
Location data is a valuable tool for consumers and government agencies, but the rules governing the use of that data are not clear, Wyden says.
The issue of tracking consumer location data on mobile phones surfaced in April when researchers discovered a file stored in an Apple Inc. iPhone containing the phone’s recent locations. Apple denied tracking iPhone user locations. In May, Apple updated its iPhone software to reduce the size of the file and to prevent the file from being stored on computers. Similarly, Google admitted it was storing similar location data.
Consumers should have control over this type of data, says Avivah Litan, an analyst at Gartner Inc. But marketers should educate consumers about how they can benefit from letting retailers and others know their location.
“Congress and state legislatures need to differentiate between mobile tracking for security purposes and for advertising and marketing purposes,” Litan says. “We certainly don’t want to be tracked, but sometimes it helps us.”
For example, a bank with a mobile app could know from the use of the app that a consumer’s phone is in Florida, but also see that someone in California just made an ATM withdrawal with that consumer’s debit card. The bank could call the customer to verify his location, she says.
The bottom line, however, is consumers need to understand that their mobile phones are being tracked, Litan says. “The truth is mobile companies know where we’re at all the time,” she says. “Otherwise they couldn’t get location-based services to us.”