Living with credit

Tracking your card purchases: Big data becoming big business

Kelly Dilworth

If sharing information about what you buy with strangers makes you squeamish, then you may want to think twice about swiping your credit card.

Everyone from the IRS to your neighborhood burger joint wants to know what you charge to your card. And, increasingly, new tools and services — courtesy of credit card issuers and other businesses — are allowing them to sneak a peek.
The IRS, for example, has just begun to track credit card purchases — in addition to a wide range of public and private data — in an effort to catch tax-evading deadbeats, reports U.S. News and World Report.  Surprise! Your credit card purchases aren't actually that private
Credit card issuers, meanwhile, are using your purchase history to target what kinds of perks to offer you — and get a sense of how likely you are to default on a loan, according to a conversation I had earlier this year with Zoot Enterprise’s Tom Johnson.
Startups such as edo Interactive and Swipely, are allowing businesses, ranging from mom-and-pop retailers to mega stores such as Best Buy, to track your in-store credit card purchases so that they can target you with discounts.
Meanwhile, sophisticated ad agencies are quietly buying credit card transaction data from card network heavyweights, such as MasterCard, according to an April 16 report in AdAge. They’re using that data to target people with digital ads and coupons.
Even the market research company, Nielsen — which is best known for publishing TV ratings that can make or break a television show — is collecting the purchase histories of people who agree to be part of its TV ratings panel and selling that data to advertisers, according to a March 20 report in AdAge.
“Basically, anything you buy, we now see,” said Nielsen executive Nada Bradbury at a recent conference in New York, according to the article.
Spooked by being tracked? Get used to it

Making money off of credit card users’ purchase histories is an idea that’s been floating around the business world for a while.
Similar to social networking sites such as Facebook, credit card companies are well aware of how valuable their vast treasure troves of consumer information are to savvy marketers. (If only people weren’t so touchy about their personal privacy, these companies could be making gobs more money.)
However, as more organizations, such as the IRS, realize the value of what’s come to be coined as “big data,” the tracking of people’s credit card purchases appears to be gaining steam — and could become even more widespread with time.
After all, as the authors of the new book “Big Data: A Revolution that Will Transform How We Live, Work and Think” point out, collecting vast quantities of real-time information about how people behave — such as what they buy using their credit cards — is a deeply powerful tool for predicting what they and people like them will do next.
The more information an organization has about you and your neighbors, the more likely they are to spot patterns that they wouldn’t otherwise see and gain unprecedented insight into who you and the people around you really are.
That’s why companies are partnering with data carriers, such as credit card issuers, and working so hard to collect and analyze as much information about you as they possibly can.
The more information they have — even if it’s chaotic and incomplete, and in some cases, partially inaccurate — the more likely it is to be right, according to “Big Data” authors Viktor Mayor-Schonberger and Kenneth Cukier.
That’s good news for businesses, which now have unprecedented tools at their disposal to try to predict what their customers will do next.
However, it could also spell trouble for everyday consumers, say big data experts.
It’s not just that privacy is no longer a reality for most people who interact with the world, both on and offline. (Who knew that credit card purchase you discreetly made online, with your cookies turned off, was being watched?)
There’s an even more disturbing problem that could arise for some consumers, say Mayor-Schonberger and Cukier: What if the data-based predictions about how you will behave are wrong, and you’re punished as a result?
Companies aren’t just using big data — such as credit card transactions — to learn more about the world and the people in it. They’re also using it to make decisions — often with real-world consequences.
For example, a credit card company could offer you a significantly higher interest rate or deny you a credit limit increase, based on information it’s gathered beyond your credit report. Or, a lender may deny you a loan altogether, basing its decision on a credit score that incorporates nontraditional data that may not be entirely accurate.
And because the emergence of “big data” is so new, there are few — if any — rulebooks, best practices or ethical guidelines for companies to follow to make sure they’re doing it right.
Instead, many companies are simply making it up as they go along. Until those rules shake out it seems like big data is fueling Big Brother.

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  • Ashley

    Thanks for the info