This guest post is by Samir Mathur, the Managing Director and General Counsel of IT-Lex, a new technology law not-for-profit. IT-Lex provides daily blog posts about topics including eDiscovery, social media and privacy, as well as monthly educational videos. They also recently launched a writing contest for current law students, for which the first prize is $5,000.
Thanks to Samir for writing on a topic which I had planned to cover myself. This allows me more time review the page proofs for The 2013 Solo and Small Firm Legal Technology Guide, to be published by the American Bar Association in January. A big help Samir!
Last week, two major companies separately announced that they have been mining their customers’ usage habits, and selling them to advertisers, who pay top dollar for this kind of specific data. As the Financial Times first reported, MasterCard monitors its users’ purchases and makes individual purchasing profiles. They can identify a customer who, for instance, is more inclined to purchase high-end electronic items, or to go on frequent business trips. The company defends this practice, which has understandably been criticized, by saying that individual privacy is not compromised. In other words, if you’ve just bought a brand new 3D flat screen TV, you’ll be aggregated into a big group of electronics-buyers, and then passed on to the advertisers. Isn’t that reassuring?
Additionally, Verizon is facing criticism for comments made by marketing chief Bill Diggins, who bragged about the company’s ability to monitor subscribers’ usage trends. In a speech earlier this year, Diggins said “Data is the new oil.” Like MasterCard, Verizon takes these customer habits, and sorts users into categories like “sports enthusiast, frequent diner or pet owner.” Once a subscriber is put into one (or more) of these boxes, they can expect to receive targeted advertisements. Verizon also maintains that all information is sold to advertisers as an aggregate, so nobody’s individual privacy is ever compromised. Verizon faces the added wrinkle of being a telecom provider, and its practice may run afoul of federal wiretapping laws.
Both MasterCard and Verizon are massive companies that make huge revenues from their paying customers. So it’s unsettling to hear that they’re making additional revenues while subjecting those same customers to additional, unsolicited, targeted advertisements. The distinction between individual information and participation in aggregated data seems to be very important to these companies, but there’s not much of a difference to the average consumer who is only aware that that was done online results in targeted ads. I wouldn’t be surprised to hear that more companies engage in this kind of practice. Hopefully the outrage will be vocal enough that someone will want to stand up for our privacy rights.
Thanks again Samir. It also occurs to me that some companies may be retaining the individual data prior to aggregation. That would be particularly odious from a privacy perspective.
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