unethical use of customer data


Little research has been done on the negative consequences of using marketing approaches that discriminate against customer segments. The idea, therefore, is that in taking advantage of the free services, the users in return agree to give the company access to their personal information, which it then uses to generate revenue that covers the cost of providing those services. “Your CEO needs to hear only one thing,” Steve had told her several days earlier, while they were comparing notes. noted. But the richest and most lucrative source of information, as well as direct contact with consumers, is through information portals like Google and social networks, particularly Facebook. The companies point out that this information is contained in their terms of service and/or privacy policies, and claim that anyone who uses the service implicitly agrees to those terms. “But I’ll go on record as being against the whole thing,” he said. He hated to admit how giddy he was—almost as gleeful as Archie Stetter had been—about the number of meaningful correlations the analysts had turned up. 20 Yet the data belies those claims. “How about this, though: Households that purchase both bananas and cashews at least quarterly seem to show only a negligible risk of developing Parkinson’s and MS.” Archie had at first been skeptical about the quality of the grocery chain’s data, but ShopSense’s well of information was deeper than he’d imagined. Laura noted that as Archie’s presentation wore on, CEO Jason Walter was jotting down notes. Prospective IFA customers were required to disclose existing medical conditions and information about their personal habits—drinking, smoking, and other high-risk activities—the actuary reminded the group. The cashier scanned in the groceries and waited while Laura swiped her card and signed the touch screen. But we think the internal transactional data are much more important. For instance, managers at any one of our properties can execute their own marketing lists and programs, but they can target only customers who have visited their properties. IFA should continue experimenting with the data to determine their richness and predictive value. It is essential that they have a safe, protected space in which to do this. 11 In particular in 2009, Facebook users were stunned to find out that personal information they thought was available only to their chosen "friends" had been made public. The two met several times, and, after some fevered discussions with her bosses in Ohio, Laura made the ShopSense executive an offer. The CEO, meanwhile, felt that Rusty was overlooking an important point. Supermarkets, department stores and other retailers can now keep track of the items purchased by each customer, both online and in-store, and, if the customer uses a credit card, bank card or store identification, can link the purchases with the customer's name and address, age, gender and other characteristics. Any of your personal data may become publicly available." Opting out is not a serious option for many. The culture at Borders is such that the managers involved would have just assumed we wouldn’t do something like that. A patient gives a hospital permission to keep a medical history with the expectation that it will facilitate medical care. I honestly don’t think these companies have hit upon a responsible formula for mining and sharing customer data. These young people cared a great deal about their privacy, but were often naïve about the rules under which they were operating and about how their personal information could be used. How can these companies leverage the customer data responsibly? Laura also knew that if IFA decided not to buy the grocer’s data, some other insurer would. Laura was about to rein in her stats guy when Rusty Ware, IFA’s chief actuary, addressed the group. The ethical use of customer data Published date: 28.03.2019 We are seeing growing interest among regulators, businesses, MPs, think tanks and the media in how data is used or ‘data ethics’. This is a "market failure," because consumers really have no power to negotiate and are therefore forced to accept whatever terms the companies set. Once the register printer had stopped chattering, the cashier curled the long strip of paper into a thick wad and handed it to Laura. Customer data come to us in many different ways. Steve was hoping to persuade CEO Donna Greer and other members of the senior team to approve the terms of the data sale to IFA. When dealing with vast quantities … “Besides, it’s not like we’d be directly drawing the risk pools,” he said. At the start of the meeting, Alan admitted he still had some concerns about selling data to IFA at all. 26 There have also been many cases of hospital employees and others looking up the computerized medical records of patients without authorization. An arrest without a conviction should certainly not be grounds for denying employment. From the consumer’s perspective, this trend raises several big concerns. Commenting on this fictional case study are George L. Jones, the CEO of Borders Group; Katherine N. Lemon, an associate professor of marketing at Boston College; David Norton, the senior vice president of relationship marketing for Harrah’s Entertainment; and Michael B. McCallister, the president and CEO of Humana. Donna couldn’t keep her mind off the IFA deal. Firms utilizing Big Data combine information from diverse sources to create knowledge, make better predictions, and tailor services. Sammy will understand, the CEO told himself as he sank deeper into the love seat in his office, a yellow legal pad on his lap and a pen and cup of espresso balanced on the arm of the couch. It was able to steal a march on its rivals simply by recognizing that not all motorcycle owners are created equal. 17 Even when companies give assurances, as Google and Facebook currently do, that they do not sell their data to unaffiliated outsiders, it is still available to their advertising "partners," which gives the companies, not to mention the subjects of the data, even less control over where it goes and how it is used. If ShopSense retained control of its data to some degree—that is, if the grocer and IFA marketed the Smart Choice program jointly, and if any offers came from ShopSense (the partner the customer has built up trust with) rather than the insurance company (a stranger, so to speak)—the relationship could work. “Trans fats and heart disease—no surprise there, I guess,” Archie said, using a laser pointer to direct the managers’ attention to a PowerPoint slide projected on the wall. Even better, both firms would be engaging in trust-building—versus trust-eroding—activities with customers. However, most users are probably not aware that their transactions with Google leave a personally identifiable, permanent track record, much less agree to such a result. 6 They then combine this intelligence with detailed information on specific individuals and subgroups of consumers to try to engage them and influence their buying decisions. 1 | ETHICAL USE OF CUSTOMER DATA IN A DIGITAL ECONOMY Foreword The ethical use of data, and the extensive use of AI in day-to-day customer interactions have been an area of … How can the two companies use the customer data responsibly? Or so he thought. But despite the lively patter of the event and the plentiful food. Though CEO Donna Greer agrees, she knows that if things go well, it could mean easy money. There had been some tension within the group about Steve’s contribution to several widely disseminated articles about ShopSense’s embrace of customer analytics. “Isn’t that the whole point of insurance?” Peter teased. It can also be generated internally. Vari Hall, Santa Clara University500 El Camino RealSanta Clara, CA 95053408-554-5319, Miller Center for Social Entrepreneurship, The Ethics of Going Back to School in a Pandemic, Systemic Racism, Police Brutality, and the Killing of George Floyd, COVID-19: Ethics, Health and Moving Forward, The Ethical Implications of Mass Shootings, Political Speech in the Age of Social Media, Point/Counterpoint: Democratic Legitimacy, Brett Kavanaugh and the Ethics of the Supreme Court Confirmation Process, http://www.computerworld.com/s/article/9215033/, http://www.washingtonpost.com/wp-dyn/content/, http://www.computerworld.com/s/article/9224820/, http://www.computerworld.com/s/article/9227663/, http://www.pcworld.com/article/16331/private_ lives_not_ours.html, http://pewInternet.org/Reports/2010/Reputation-Management.aspx, http://www.mercurynews.com/business/ci_20779017/ facebook-tests-accounts-pre-teens-which-are-currently, http://www.nytimes.com/2010/09/05/magazine/05hacking-t.html, Internet Ethics: Views From Silicon Valley, Why Social Media Companies Should Renew Their Bans on Political Ads, Unauthorized Transmission and Use of Personal Data. This is … Furthermore it can make it impossible for those who want to turn their lives around to do so, since their pasts follow them around and frustrate any attempts to change. And many customers seem to be willing to live with it—perhaps with the unrealistic hope that they may reach the upper echelon and reap the ensuing benefits. 21 MIT scholar Sherry Turkle, in a thorough and thoughtful study of how teenagers use and are affected by social networks, found that those she studied were very careful and intentional about how they crafted their online identities. Big Data should not interfere with human will: Big data … Regardless of your industry, you have to start with that. However, in many cases it is questionable whether these conditions have been properly met. There was always the chance an employee would let something slip, but even if that happened, Steve doubted anyone would be shocked. Read the Ethical Use of Customer Data … I rarely eat at home, but I still buy tons of groceries—some healthy, some not so healthy—for my kids and their friends. Technology-driven and information-intensive business operations are typical in contemporary corporations. Get over it." I could see the upside of using a grocer’s loyalty card data to develop a wellness-based incentive program for insurance customers. The insurer wanted to buy a small sample of the grocer’s customer loyalty card data to determine its quality and reliability; IFA wanted to find out if the ShopSense information would be meaningful when stacked up against its own claims information. The ShopSense data reflect food bought but not necessarily consumed, and individuals buy food at many stores, not just one. The corporate cultures suffer. A big hole in these data, though, is that people buy food for others besides themselves. We use a range of industry standard security measures, including encryption and firewalls, to protect our members’ privacy and medical information. Before she could follow up on Jason’s comments, though, Geneva Hendrickson, IFA’s senior vice president for ethics and corporate responsibility, posed a blue-sky question to the group: “Take the fruit-and-nut stat Archie cited. First and foremost, they need to let customers opt in to their data-sharing arrangement. That is why privacy is especially important for adolescents. This violates one of the fundamental principles of privacy, that a person must be able to control how much personal information is revealed to different parties, depending on the nature of the relationship and level of trust with each one. “You know, this deal isn’t really as much of a stretch as you might think.” He pointed out that the company had for years been buying from information brokers lists of customers who purchased specific drugs and products. As a benefit to society?”. Like IFA, we ask our customers to share their personal and medical histories with us (the risky behaviors as well as the good habits) so we can acquaint them with programs and preventive services geared to their health status. Customers’ information needs to be protected. Is it written in … 22 Their age and lack of experience and wisdom leaves them very vulnerable to exploitation. Moreover the study found that young adults are even more careful about what they reveal about themselves online and with whom than older users. The CEO shot her husband a playfully peeved look—and reminded herself to send an e-mail to Steve when they got home. And IFA was among the best in the industry at evaluating external sources of data (credit histories, demographic studies, analyses of socioeconomic status, and so on) to predict depression, back pain, and other expensive chronic conditions. We tell customers the value proposition up front: Let us track your play at our properties, and we can help you enjoy the experience better with richer rewards and improved service. What, then, should IFA and ShopSense do? We don’t want any offers we present to have negative connotations—for instance, we avoid bombarding people with e-mails about a product they may have absolutely no interest in. One corner of the space was being used to store prototypes of regional in-store displays featuring several members of the Houston Astros’ pitching staff. You mention the importance of ethics in data. “Have a nice night,” she said mechanically. But we assure our customers up front that their information will be handled with the utmost respect. Companies use employee data to outline a network of relationships among employees, customers, vendors, and others, identifying subject matter experts. But if companies are forced to choose between ethical behavior and maximizing shareholder value, the track record seems to … ShopSense’s loyalty card data are at the center of this venture, but the grocer’s goal here is not to increase customer loyalty. When the data is sensitive and personal, however, this can lead to serious abuse, because it opens the way for the data to be used for purposes quite different from its intended use. And, according to recent studies, more and more of those organizations were sharing their data with business partners. Thus the easy availability of this kind of information frequently leads to unfair and discriminatory treatment of those seeking employment. IFA’s customers might also think twice about their relationship with the insurer. As one critic put it, "too much is made of consent in this context. Still, the deal wasn’t without risks: By selling the information to IFA, it might end up diluting or destroying valuable and hard-won customer relationships. It should be the same with an online retailer, email provider, search service, or social network. Archie had been invaluable in guiding the pilot project. Just a few more items to go: “A dozen eggs, a half gallon of orange juice, and—a box of Dip & Dunk cereal?” Her six-year-old daughter, Maryellen, had obviously used the step stool to get at the list on the counter and had scrawled her high-fructose demand at the bottom of the paper in bright-orange marker. 7. If IFA came up with proprietary health findings, would the company have to share what it learned? “Do we need more sunscreen?” Laura wondered for a moment, before deciding to go without. So the question for the CEOs of ShopSense and IFA is, Would customers feel comfortable with the data-sharing arrangement if they knew about it? As the case study illustrates, companies will soon be able to create fairly exhaustive, highly accurate profiles of customers without having had any direct interaction with them. The focus was on varieties from Chile and other Latin American countries, and Donna and Peter had yet to find a sample they didn’t like. Some of the information captured in our online joint promotions is accessible to both Harrah’s and its business partners, but the promotions are clearly positioned as opt in. At that point, Archie begged to show the group one more slide: sales of prophylactics versus HIV-related claims. “ Customers find out, they stop using their cards, and we stop getting the information that drives this whole train.”. Many of its card-driven marketing programs had since been deemed cutting-edge by others in and outside the industry. Unethical use of data tracking tools Unfortunately, concern over internet privacy still exists despite the implementation of data privacy laws such as the Data Protection Act . The group gradually came together in a slightly cluttered room off the main hallway on the 18th floor. It will help the company to develop new products that will fulfill the expectations of the customers… One of the great advantages of the computer is that it provides such easy access to data, through powerful search facilities, ease of communication, and sophisticated analysis capabilities. Yet Big Data has also been criticized as a breach of … A lot of people signed up when Progressive gave discounts to customers who agreed to put devices in their cars that would monitor their driving habits. Decisions that might be made on the basis of the shared data represent another hazard for consumers—and for organizations. We want the CEO to look at the ROI number and feel we’ve met and … Now, with the development of mobile apps that track a user's location in real time, the ads can even be adapted to the recipient's current location. For years, IFA’s regional manager for West Coast operations, Laura Brickman, had been championing the use of customer analytics—drawing conclusions about consumer behaviors based on patterns found in collected data. Laura Brickman was glad she was almost done grocery shopping. It was the same way at both Saks and Target when I was with those companies. ... Keep in mind that by not addressing ethical use of data … Neither company seems to particularly care about its customers. 2 Employers can also obtain credit records, medical and insurance records, and histories of workers' compensation claims. Then O.Z. In those one-on-one conversations, only Alan Atkins, the grocery chain’s chief operations officer, had raised any significant issues, and Steve had dealt patiently with each of them. Thus, consumers may be giving rights unwittingly, and companies using customer data in this way can be seen as unethical, as this oversteps what might be considered “reasonable” . David Norton (dnorton@harrahs.com) is the senior vice president of relationship marketing at Harrah’s Entertainment, based in Las Vegas. The rules governing who can use the data and for what purpose may not be clear or restrictive enough to protect the intentions and interests of the subjects. Despite the fact that alienating 75% to 90% of customers may not be the best idea in the long run, many retailers have adopted this “top tier” approach to managing customer relationships. I can’t tell people how to run their meetings or who should be at the table when the tougher, gray-area decisions need to be made, but whoever is there has to have those core principles and values in mind. (We would try to find a way to build positives into it, however, so customers would look at the interchange and say “That’s in my best interest; thank you.”) But Humana certainly wouldn’t enter into any kind of data-transfer arrangement without ensuring that our customers’ personal information and the integrity of our relationship with them would be properly protected. Unless you are in the top echelon of customers—those with the highest lifetime value, say—you may pay higher prices, get fewer special offers, or receive less service than other consumers. Or the employer may see remarks critical of the company or its management that was meant only for a few trusted colleagues. Because the detailed and personal data is so valuable and because the ability to reach the target market directly online is so desirable, services such as Google and Facebook, which both provide the data and serve the ads to the intended recipients, are paid well for their part in the process. “Even if a correlation doesn’t hold up in the medical community, that doesn’t mean it’s not useful to us,” someone else suggested. Health insurer IFA and grocery chain ShopSense have formed an intriguing partnership, but it threatens to test customers’ tolerance for sharing personal information. One of the biggest problems in U.S. health care today is obesity. And what about the employees in each company who may be uncomfortable with what the companies are trying to pull off? Taking care not to crack any of the eggs, she squeezed the remaining items into the cart. Yet, as noted earlier, studies show that many employers will reject an otherwise acceptable candidate if the candidate has an arrest record. If someone reveals personal information as part of an application for a credit card, it is because the person decides it is worth the benefit, and because the person is establishing a relationship of mutual trust with the credit provider and its agents. The company should explore whether there are some customer data it should exclude from the transfer—information that could be perceived as exceedingly sensitive, such as pharmacy and alcohol purchases. Therefore they want as few limits as possible on what they can do with that data; and their privacy policies reflect that. However, the policies are generally very long and complex. 12 Just recently, in response to pressure from governments, consumer groups and other critics, some companies have begun to give users better control over how and where their information is collected, stored and used, through providing "opt-out" provisions and finer privacy controls. They understand exactly what we’re capturing, the rewards they’ll get, and what the company will do with the information. Then Steve began distributing copies of the spreadsheets outlining the five-year returns ShopSense could realize from the deal. Data-Analysis methods and a particularly deep trove of information frequently leads to greater possibilities for outsiders to tap into personal! To customers knows that if IFA came up with proprietary insights into the food-related drivers of.! Are typical in contemporary corporations bought but not necessarily consumed, and hardly. 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Foremost, they need to let customers opt in to their data-sharing arrangement if they about!

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