Laura Moy, Social Values in the Era of Big Data: When Does “Okay by Me” Become Not Okay for Society?

By privacylaw | October 3, 2013 at 06:13 pm

PLSC 2013

Workshop draft abstract:

A web surfer consents to sharing information with a website in exchange for receiving targeted advertisements; a shopper consents to sharing information with her grocery store in exchange for receiving selected discounts on goods; and a patient consents to sharing information with her health insurance company in exchange for the benefits she enjoys. On an individual basis, these three people appear to have experienced no violation of their privacy interests.

But what if the website uses aggregate information about its visitors to display targeted content that keeps web surfers in predesigned “boxes”; the grocery store uses aggregate information about its shoppers to offer big spenders loss leaders that are subsidized by price hikes on staples; and the insurance provider uses aggregate information about patients to raise premiums on those it predicts are genetically predisposed to developing chronic illnesses? If the three people introduced above knew all of this, would they still feel confident that their personal information was being used in a way consistent with their expectations?

I argue that for a substantial number of people the answer to this question is “no.” Accordingly, while the primary use of each individual’s information by the collecting entity may be perfectly consistent with that individual’s expectations and therefore not present a privacy violation, secondary uses of that information aggregated with information about others may be inconsistent with society’s expectations and therefore present violations. This idea addresses (and responds in the resounding affirmative) to a question that arose at last year’s PLSC—a writing partner and I presented a paper at that time on the grocery store scenario briefly touched on above, and several commenters asked, “Is this even a privacy issue?”

Drawing on Priscilla Regan’s work on the social importance of privacy and Helen Nissenbaum’s theory of contextual integrity, I suggest a framework for identifying particular information uses or flows as possible violations of the social privacy value, using examples to illustrate the framework. I then explore the policy implications of the framework and seek suggestions for determining when potential benefits associated with a particular use outweigh the cost to society.

Laura Moy & Amanda Conley, Paying the Wealthy for being Wealthy: The Hidden Costs of Behavioral Marketing

By privacylaw | May 24, 2013 at 05:21 pm

Laura Moy & Amanda Conley, Paying the Wealthy for being Wealthy: The Hidden Costs of Behavioral Marketing

Comment by: Marc Groman

PLSC 2012

Workshop draft abstract:

Despite a growing awareness that third parties gather, store, and even sell their personal information, many consumers continue to share their information with companies that collect it by shopping online or signing up for loyalty card programs in brick and mortar stores. Insofar as this results from individuals affirmatively weighing the cost of ceding control of their personal information against the benefit of having that information conveniently pre-stored in retailers’ databases or the benefit of receiving advertisements targeted at their precise interests, behavioral advertising appears desirable, holding the promise of eventual perfect market efficiency. But even if individual consumers consciously consent to having their personal information recorded and used to provide them with targeted advertising, this information collection—particularly in the context of loyalty programs—is not cost-free. Our paper seeks to illuminate some of the hidden costs to consumers of information collection associated with individualized targeting.

The costs to consumers of highly targeted marketing are likely borne disproportionately by those with the least disposable income. Grocery store loyalty programs, for example, are designed to identify and reward the wealthiest shoppers—the small minority of customers responsible for a majority of the store’s revenue—at the expense of those at the lowest end of the income spectrum.

Not so long ago, coupons were distributed primarily in newspapers and circulars, and consumers could clip and organize these coupons if they felt that was a valuable use of their time. Today, by contrast, wealthier consumers receive targeted discounts on the products they purchase most, while the coupon clippers of the past who visit multiple stores and purchase low-cost items receive little or no benefit from stores that now view them as valueless or even revenue decreasing and undesirable. This flip on traditional price discrimination—overcharging the poor while giving discounts to the wealthy—is facilitated by information collectors’ relatively newfound ability to extract and use individual-level consumer data.

Not only does this reverse price discrimination reinforce existing income inequalities; it may even exacerbate them. Many stores mark up their prices above the MSRP in order to create the impression that they are providing a benefit to their (wealthy) customers by giving them a “discount.” Wealthy customers’ “discounts,” however, must be paid for somehow. To avoid alienating their most profitable customers, rational stores shift this cost onto the shoulders of non-wealthy customers in the form of inflated prices.

Drawing on Helen Nissenbaum’s theory of contextual integrity, we suggest that these uses of customer information violate traditional expectations of all who sign up for loyalty programs, regardless of income level. In addition, they place the power of correcting this injustice entirely in the hands of the wealthy: only if the most favored consumers choose to opt out of having their personal information collected will non-wealthy consumers cease to be disadvantaged by behavioral marketing.

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