Stalking the Cyberazzi
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\"RRDo you ever get the ominous feeling you’re being watched or followed? Well, you are!

They know what you’re doing and where you are at any given time; what you eat; the car you drive; ailments you have and whether you’re pregnant; divorced; trying to lose weight; cheating on your spouse at some sleazy motel; or the color of the upholstery in your Lear Jet.

They know every predilection, quirk and fetish you thought were buried deep in the recesses of your private life. You are fair game and their job is to create a dossier on you from cradle to grave.

Disturbing isn’t it? But this is the shadowy world of the data broker, companies that track every aspect of people’s lives and lifestyles. They are the keepers of a Pandora’s box of consumer data and it’s there for anyone to open—for a price!

The Privacy Myth

Let’s be clear from the get-go. Nothing illegal is going on here. You can rant about the rise of Orwellian society or other 1984 metaphors, but the simple fact is that you lost any expectation of privacy when you applied for your first credit card or driver’s license and opened your first bank account.

Companies like Acxiom, Experian, Equifax, Corelogic, Intelius and thousands like them are data aggregators, latter-day hunters and gatherers who glean information from public and non-public sources such as hospital records, in-store and online purchases, the Department of Motor Vehicles, social network sites, movie choices and voting records.

This is data mining on steroids. In effect, they are mapping the consumer genome and taking the guesswork out of marketing and advertising. They analyze, collate and create what have been called “life event triggers” like marriage, divorce, having a baby, buying a home or sending a kid to college — events that data hungry marketers will gobble up at any price in order to get a better handle on existing and potential customers.

How much? According to estimates, data brokers represent a $150 billion industry, roughly twice the budget for the entire US intelligence community. Combined with highly sophisticated technology, they can make the FBI, CIA and National Security Agency surveillance programs look like kids with a clipboard.

Shadowing Consumers

But like the clandestine services, data brokers prefer to stay out of the limelight, and even dislike the term data brokers, which has a certain negative connotation. They much prefer to be known by gentler, less confrontational names like digital marketers or even consumer anthropologists.

My personal favorite is “cyberazzi” since this is a business that basically stalks everyone to get a picture of each of his or her lives. The funny thing is that most people don’t even know cyberazzi exist, let alone what they do.

And what they do is absolutely staggering in scope. Acxiom, for example, has reportedly worked with at least half of the top Fortune 100 companies and maintains one of the largest consumer databases in the world. It has more than 23,000 computer servers at a facility in Conway, Arkansas, that collects, collates and analyzes some 50 trillion transactions annually from about 500 million consumers, each of which is assigned to one of 70 socioeconomic clusters.

Data Addiction

The siren’s song of data is pretty hard for any competitive company to resist, given the depth of the information and cost. According to a recent analysis in the Financial Times, basic demographic and geographic data goes for about 50 cents per thousand people. Car buyers are worth about $2.11 per thousand, people’s TV viewing habits, $1.85, and information on moviegoers, $3.00 per thousand.

The highest prices are for homebuyers and new parents. Each of those costs about $85 per thousand. However, expectant mothers cost about 11 cents each. Experian reportedly has a separate marketing division selling the names of expectant mothers and parents of newborns with lists that are updated weekly.

A list of people with specific health conditions costs 26 cents per person; an indication of how profitable healthcare can be despite healthcare “reform.”

With all the recent publicity about NSA surveillance programs, privacy advocates are getting more than a bit twitchy about the subject of data brokers even though the information is available to anyone with the right software and the skill to use it.

Crossing the Line

What bothers privacy advocates most is the industry’s lack of transparency and oversight. In fact, some feel that a few data brokers have crossed the line from being a harmless consumer-marketing tool to invaders of privacy. For instance, several data brokers specialize in advertising lists of gays and lesbians and people who have sexually transmitted diseases or alcohol and gambling addictions.

But the fact is that there are no laws currently on the books requiring brokers to maintain the privacy of the consumer data they collect unless it’s used for things like credit, employment, insurance and housing. Even that rule is pretty vague. This is the polar opposite of many Western European countries, which require companies to provide consumers access to all their data and, in some cases, even gives them the right to delete information.

The US government would like to see some changes. Last year, the Federal Trade Commission issued orders requiring nine data brokers to provide information on how they collect and use data. The investigation, which includes such companies as Acxiom, Coreligic, Datalogix, Intelligius and something called PeekYou, seems to be stuck in the bureaucratic mud.

But the powerful Senate Commerce Committee chaired by Jay Rockefeller of West Virginia has its back up on the issue and feels that new regulations are being stonewalled by Axciom, Epsilon and Experian who — surprise, surprise! — see no reason whatsoever for additional regulations. One data broker CEO went so far as to say that the Internet is an advertising medium and regulations are already in place. You have to wonder what Internet he’s looking at. Rockefeller, however, is sponsoring legislation called “The Data Broker, Accountability and Transparency Act” that would allow consumers to see and correct information that’s being gathered about them and to opt out of lists entirely. It’s being applauded and assisted informally by privacy advocates like the Public Interest Research Group, which was spooked by revelations about the NSA surveillance programs. Not surprisingly, the big three — Acxiom, Experian and Epsilon — have declined to give lawmakers any information about what sources they use or to whom they sell the information.

Yes there are contractual issues at play here. But it’s never a good idea to outright refuse to cooperate with the United States Senate.

Ethical Conundrum

But we have become a data-driven society. As such, the question is not really about gathering information, but how it’s used. The Direct Marketing Association, which — surprise, surprise! — has also aggressively fought any regulatory solution, said it expects data brokers to adhere to ethical guidelines. Epsilon says it imposes strict guidelines on how clients can use the information.

I don’t believe that retailers are doing anything particularly unethical — at least not by design — and it’s unlikely they could be held accountable for the actions of some that are walking an ethical tightrope. But given the competitive landscape, could you turn down an opportunity to get an edge? We are in an era where information is considered to be “the new oil” and so-called “Big Data” is the new buzzword for success.

But once the genie is out of the bottle, he’s not going back in. The days of simply gathering basic consumer information like zip codes for the purpose of sending out catalogs or collecting loyalty card data on past purchases is past. And at what point will you encounter consumer blowback over information gathering and usage?

  • Will it be when you send out coupons for baby products before their spouses or parents know they’re pregnant?
  • Will it be when you target special sales to gay and lesbian shoppers?
  • Is it when you focus sales and promotions on cash-strapped or bankrupt consumers?
  • Or when you target people of a certain ethnic or religious persuasions, or market your company’s credit card to people who may have fallen on hard times, or seniors on a fixed income?

Data’s Dark Side

Can you imagine you’re a father and receive a letter addressed to “daughter killed in car crash”? Sadly, it happened. Or, indicating that someone could be a sex offender simply because of their first or last name? This also happened. The firm involved was fined $1 million for violating the Fair Credit Reporting Act and barred from doing business. But the damage was already done.

This is the dark side of consumer data. Mistakes and overreach can easily happen when all this information is out there for the taking. An even bigger mistake would be for retailers to view consumer data they’ve collected as a source of revenue and sell it to third parties. The question is whether this puts retailers, or any other business, in the liability loop.

I’m reminded of a quote from comic book icon Stan Lee: “With great power comes great responsibility.”

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