Authorities in London have told a company making ‘smart’ recycling bins it will no longer be allowed to collect data from smartphone users as they pass by.

The firm, Renew Solutions, has been ordered by the City of London Corporation to stop using recycling bins to track the smartphones of passers-by, which can identify a passer-by by his or her media access control (MAC) address, a unique identifier assigned by the manufacturer, as well as measuring a person’s speed and proximity to the bin.

It was revealed last week that Renew was testing out tracking technology in 12 recycling bins in London's financial district, gathering data advertisers could use to create targeted ads displayed on LCD display screens on the bins.

The City of London Corporation has asked the firm to stop the data collection, and has taken the issue to the Information Commissioner's Office.

A spokesperson from the Corporation said: "Irrespective of what's technically possible, anything that happens like this on the streets needs to be done carefully, with the backing of an informed public."

The Information Commissioner's Office responded with a statement, saying: "Any technology that involves the processing of personal information must comply with the Data Protection Act. We are aware of the concerns being raised over the use of these bins and will be making inquiries to establish what action, if any, is required."

The action follows concerns raised by privacy campaign group Big Brother Watch, after details of the technology used in the bins emerged in the online magazine Quartz.

Chief executive of Renew, Kaveh Memari, has confirmed that all tests have been stopped ‘in the meantime’, and insisted the trials never collected personal information.

In a statement, Memari said: ‘A lot of what had been extrapolated is capabilities that could potentially be developed but none of which are workable right now. We no longer continue to count devices and are presently not able to distinguish uniques versus repeats. However, the process is very much like a website. You can tell how many hits you have had and evaluate repeat visitors, but we cannot tell anything personal about any of the visitors on the website. So we were unable to tell, for example, whether we had seen devices or not as we never gathered any personal details.’

He added that more capabilities could be developed in the future, but that the public would be made aware of any changes.

Smart data ‘grey area’

This year, London signed a 21-year contract for Renew Solutions’ ‘smart’ paper recycling bins, which cost £15,000 to make and are not only equipped with LCD screens that provide real-time information about tube line services, weather forecasts and stock exchange information, and can be used as emergency communication systems by the police and emergency services. Some are even equipped with WiFi.

However, the company’s collection of anonymous data through MAC addresses has sparked uncertainty. While it is legal in the UK, the practice has been described as a ‘grey area’.

The UK and the EU have strict laws about mining personal data using cookies, which involves installing a small monitoring device on people's phones or computers, but the process of tracking MAC codes leaves no trace on individuals' handsets. Websites or companies wanting to use cookies to tracks users' habits have to ask for permission. By monitoring MAC addresses, which just keeps a log of each time a WiFi-enabled device connects to another device, they can work around this requirement.

Nick Pickles, director of Big Brother Watch, said: "I am pleased the City of London has called a halt to this scheme, but questions need to be asked about how such a blatant attack on people's privacy was able to occur in the first place.

"Systems like this highlight how technology has made tracking us much easier, and in the rush to generate data and revenue there is not enough of a deterrent for people to stop and ensure that people are asked to give their consent before any data is collected."