Credit Reports
• Example of how information about customers can
itself become a commodity
• Credit bureaus
– Keep track of an individual’s assets, debts, and history of
paying bills and repaying loans
– Sell credit reports to banks, credit card companies, and
other potential lenders
• System gives you more choices in where to borrow
money
• Poor credit can hurt employment prospects
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Targeted Direct Mail
• Businesses mail advertisements only to
those most likely to purchase products
• Experian and other companies provide
customized mailing lists
• Example: Target’s efforts to reach
pregnant women
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Microtargeting
• Political campaigns determine voters most likely
to support particular candidates
– Voter registration
– Voting frequency
– Consumer data
– GIS data
• Target direct mailings, emails, text messages,
home visits to most likely supporters
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Price Customization
• Data aggregation firms sell profiles of
shopper to on-line retailers
• Retailers use this information to offer
different prices to different people
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Social Network Analysis
• Collect information from social networks to
inform decisions
• Bharti Airtel (India) offers special promotions
to “influencers”
• Police use Facebook and Twitter posts to
deploy officers on big party nights
• Banks combine social network data with
credit reports to determine creditworthiness
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Police Monitor Facebook and Twitter
to Identify Locations of Big Parties
© Allen Sullivan/ZUMA Press/Newscom
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5.5 Examples of Consumer Backlash
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Marketplace: Households
• Lotus Development Corporation developed CD
with information on 120 million Americans
• Planned to sell CD to small businesses that
wanted to create mailing lists based on various
criteria, such as household income
• More than 30,000 consumers complained to
Lotus about invasion of privacy
• Lotus dropped plans to sell CD
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Facebook Beacon
• Fandango, eBay, and 42 other online businesses
paid Facebook to do “word of mouth” advertising
• Facebook users surprised to learn information
about their purchases was shared with friends
• Beacon was based on an opt-out policy
• Beacon strongly criticized by various groups
• Facebook switched to an opt-in policy regarding
Beacon
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Netflix Prize
• Netflix offered $1 million prize to any group that could come
up with a significantly better algorithm for predicting user
ratings
• Released more than 100 million movie ratings from a half
million customers
– Stripped ratings of private information
• Researchers demonstrated that ratings not truly
anonymous if a little more information from individuals was
available
• U.S. Federal Trade Commission complaint and lawsuit
• Netflix canceled sequel to Netflix Prize
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Malls Track Shoppers’ Cell Phones
• In 2011 two malls recorded movement of
shopper by tracking locations of cell
phones
– How much time people spend in each store?
– Do people who shop at X also shop at Y?
– Are there unpopular areas of mall?
• Small signs informed shoppers of study
• After protest, mall quickly halted study
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iPhone Apps Upload Address Books
• In 2012 a programmer discovered Path was
uploading iPhone address books without
permission
• Internet community pointed out this practice
violated Apple’s guidelines
• CEO of Path apologized; app rewritten
• Twitter, Foursquare, and Instagram also
implicated for same practice
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Instagram’s Proposed Change to
Terms of Service
• Late 2012: Instagram announced changes
– Privacy policy
– Terms of service
• Legal experts: Instagram and Facebook would
have right to use photos in ads without permission
• Instagram CEO: New policy misunderstood
• Changed advertising section of terms of service
agreement back to original version
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