16. July 2014
At the end of 2013, Apple brought its new indoor proximity sensor technology, the iBeacon, onto the market. The technology enables smartphones and other devices in the local area to perform actions and receive notifications. But what are the legal considerations?
iBeacon and the law
The iBeacon was launched by Apple at the end of 2013. The indoor proximity sensor uses Bluetooth low energy proximity sensing to transmit a unique identification number which can be received by the app or software installed on nearby smartphones and other devices.
The technology has a range of uses including: displaying the current deals in a supermarket; displaying information on a painting in a museum; and allowing consumers to make contactless payments for goods in a shop. Individuals wishing to rent a car or a bike, for example, can use the technology to automatically identify themselves and pay. In the USA, the iBeacon is already being used in stadiums to guide baseball fans to their seats.
The iBeacon technology is versatile and sets the course for offering consumers and users a more individual experience. However, when combined with the relevant app, the technology is not without its legal issues.
Notifications as unsolicited advertising
Under German Unfair Competition rules, unsolicited advertising sent by SMS or e-mail is considered an unreasonable nuisance if the recipient has not previously submitted their consent to receiving the messages (see § 7 German Unfair Competition Act).
It can be safely assumed that many of the messages sent via the iBeacon technology to apps will constitute advertising. The question is therefore whether the installation of the app alone can be deemed to constitute consent.
The clear answer is no. Installing an app on a smartphone is insufficient to constitute the submission of consent. This is because the giving of consent must relate to a specific set of circumstances. Where general consent is hidden in standard business terms, the consent is ineffective. Instead, users must be required to actively give their consent through the so-called ‘opt-in’ procedure. Businesses that send unsolicited advertising messages to consumers risk committing competition infringements and receiving warning letters.
Businesses also act unlawfully if there activities unreasonably interfere with consumers’ freedom to make decisions. Through iBeacon apps, users automatically receive messages and advertising offers. This could be deemed to be an unreasonable interference if pressure is used to influence a consumer into making a purchasing decision. This would occur for example, when a consumer receives information about a short-term sale while looking at a product.
Finally, businesses also act illegally if they withhold information from consumers which could influence a purchasing decision (see § 5a German Unfair Competition Act). It must therefore be ensured that when advertising is sent via the iBeacon technology, all important information concerning the product and conditions is visible to the consumer. This includes information concerning the company and all important information concerning the conclusion of the prospective purchase contract. This could be a challenge when it comes to displaying the information on smartphone screens.
Data protection problems
Via the iBeacon technology, location data is sent to and processed by the device app. The problem arises as location data is considered personal data and is protected by German data protection laws.
The collection and processing of such data requires the express consent of the individual (see § 4 German Data Protection Act). The individual must be given information about the precise purpose and scope behind the data processing. The consent cannot be hidden in standard business terms, but must be expressly obtained. App operators who fail to obtain users’ consent breach the law.
Here too, the challenge will be trying to clearly present such a large amount of information on a small smartphone display.
The iBeacon technology is sure to contribute to consumers’ demands in the future for a more individual experience. However, it should not be overlooked that the system is based on the collection of personal data and that these data require sufficient legal protection.
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