We know that the federal government is spying on us, tracking our phone calls and emails, but not everyone knows that private companies are also collecting a lot of information on us.
It's known as data mining. Retailers call it a marketing tool, but consumer privacy experts call it an invasion of privacy that could easily be used against us.
"Frankly, it is negligent that the United States is behind the rest of the world when it comes to the security of our payment networks, and it is a main reason that U.S. consumers' information is targeted by criminals. It is past time for the private sector to take data security seriously," testified Illinois Attorney General Lisa Madigan on Capitol Hill Wednesday.
The recent hearings resulting from the security breach at Target and Neiman Marcus are a reminder to us all that retailers have a lot of personal information on us, information that could easily fall into the wrong hands.
Tim Krause is an associate professor at UW-Stevens Point. He teaches courses in the computing and new media technology department. Krause says the evolution of information technology has allowed private companies to store massive amounts of information on consumer behavior.
"The idea of data mining is that we literally in this day and age collect data on every aspect of life that you could possibly imagine," Krause said.
Big retailers, in particular, are especially curious about you. They want to know who you are specifically, what you like to buy, how much time you spend in their store and most importantly, how to get you to spend more money.
"Data and merchandising have always been important concepts," Krause said. "Store owners give a lot of thought to product placement, to upselling and to other techniques and now that we've got access to consumer data, we know a lot more about how to market to them and their purchasing habits and the trends in their spending.
Retailers have been tracking consumer behavior as a marketing tool for some time, but technology has made it easier for them. Each time you swipe your credit card or a store loyalty card - one that promotes discounts, points or rewards - you're painting a picture of who you are, and that's just what retailers crave.
Because retailers know what you're buying, they may even know some of your biggest news before people in your life do. An example from a New York Times investigation details how a father stormed into a Target, demanding to know why the retailer was sending his teenage daughter free baby supplies. It turns out she was pregnant, and that the store figured it out before he had any clue.
"Knowing how you behave in a store, knowing the things you buy, a company can tailor its messages and offers to you," said Liz McIntyre, a consumer privacy expert and co-author of the Spychips book series.
So, what's the big deal? Doesn't that just mean more ways to save? McIntyre warns that this personal information can be used against you, possibly in ways we don't even know exist.
"Not only is this used for profit margins, this data can be subpoenaed. It can be taken into court, for example, and of course the federal government can get that information any time it wants it through the Patriot Act," she said.
McIntyre notes several examples of how people were negatively affected by their shopping profiles, including people who were going through a divorce. When someone wanted to portray their ex as an unfit parent, they could use their shopping record of buying healthy food or alcohol to do so.
By using credit cards or loyalty cards, consumers are voluntarily giving up this information, whether they know it or not.
"If you read the fine print you'll find some pretty shocking ways stores can use this information," McIntyre said.
For example, on Walgreen's website, the company says they can use and disclose your protected health information in a multitude of ways that do not require your prior authorization. Things like research, third party business associates, even disaster relief efforts are named.
Target, the center of a massive credit card data breach, says they may share customer information with third parties including sweepstakes vendors, mobile marketers and call center service providers.
It's all there, in the fine print.
"There should be some version of the fine print that's written in plain English, that's easy for the consumer to understand and there's still fine print underneath it if that's necessary, but we're at least being a little more transparent in the process of what we're doing with that information," Krause notes.
Ever wonder why stores want your zip code when you're checking out? It's not just to learn where they're pulling customers from. It also gives retailers a crystal clear picture of who you are - that you're the John Smith who lives in Wausau, not the one in Milwaukee for example. Then they have your address, phone number and lots of other information too.
"If anything I would want to know what third parties my personal information was going to be shared with, usually for me personally, that's the red flag," Krause said.
Retailers tracking consumer information is perfectly legal as far as we know, and if you don't mind, that's fine. But if you feel it's an invasion of privacy and don't like the idea of big brother watching you, McIntyre recommends using cash, avoiding loyalty programs (or ask to sign up anonymously) and speaking up.
"Consumers, if they want to take their power back, they're going to have to be heard, they're going to have to stand up and say hey, I don't want to be tracked," she said.
Retailers are also learning about where people go throughout their stores, by tapping into the Wi-Fi signals on shoppers' smartphones.
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