When your card's big data collection goes from cool to creepy
Anatolii Babii/iStock /Getty Images Plus/Getty Images
Anatolii Babii/iStock /Getty Images Plus/Getty Images
Are credit card issuers crossing the line into stalker territory?
Take, for instance, getting an email that says something like:
“We see that you have an upcoming trip. No need to worry about notifying us of your travels.”
Or your phone might buzz with the following message:
“Get 10 percent off when you use your card at XYZ Clothing – that you're passing right now!”
Some consumers might take these as examples of superior customer service, while others might feel uneasy realizing that creditors are literally tapped into their every move.
That raises the question: How much do your credit issuers really know about you, and is there anything you can do about it? In one study by Pew Research Center, 91 percent of adults agreed with the statement: “Consumers have lost control over how personal information is collected and used by companies.” In the same survey, only 37 percent said they were confident that credit card companies could keep their information private and secure.
“If you look at surveys, consumers express alarm and concern about the level of tracking. Even with offline activity like using a credit card, there is a detailed picture being painted of you,” says Michelle De Mooy, deputy director of the Privacy & Data Project at the Center for Democracy and Technology.
Your comfort level will likely depend on how you personally feel about your activity being monitored, and how such data is being used, she adds. “For instance, fraud protection is a good thing; most people appreciate that part of monitoring,” says De Mooy.
So what's the fine line between being intrusive and offering innovative service? Take a look inside the creepy versus cool big data debate, and learn how to regain at least some control over your information.
Creepy: You are being judged
Like it or not, right now, analytics are being collected and used to predict things about you, says Linda Sherry, director of national priorities for Consumer Action, a privacy advocacy group. You might not agree with the conclusions being drawn about you, or they might be outright wrong, but here's the scary part – it's often a mystery as to how credit card companies and financial institutions are using such proprietary data.
To companies, she says, consumers are just data, not people. “They want to know how wealthy you are, how much you'll spend, what products you want, and they'll package you up and stamp you with an A, B, C or D, and there's not a whole lot you can do about that,” says Sherry.
For example, most spending is assigned a merchant category code, so using plastic in bars, pawnshops, casinos or making bail payments could create an unfavorable impression of you. “People are concerned about the role that internal scoring plays in how your card treats you,” says Sherry.
Cool: Good customer service
The other side of the coin is that all of this behavior tracking allows issuers to improve their customer service. “Behavioral and usage trends are definitely important from a creditor's perspective,” says Randy Hopper, vice president of credit cards for Navy Federal Credit Union. “Just like making payments on time and managing debt-to-credit ratio is important, usage behavior is indicative of what your future credit picture can look like. It all falls under the umbrella or responsibly using credit,” he says.
At Navy Federal, such activity is used to offer members credit line increases or card upgrade offers. The insights also help issuers provide more-personalized service demanded by today's digitally savvy consumers. According to the 2015 U.S Consumer Payment Choice Study by TSYS, 60 percent of people said they are open to receiving coupons and special offers based on the information collected about their past purchases.
“We're hearing lately that our members like offers that have relevant value to them and their behavior,” says Hopper. As such, his company creates a picture of what offers a member might want to see based on demographic information, customer focus group feedback and individual profile information. “However, we don't want folks to feel like their information is being used to take advantage of some position they may be in,” he says.
Creepy: They're watching your every move
While you might be fine with a creditor delving into your categories of spending, how do you feel about them knowing where you are? “If you have an open app that's linked to a credit card, they know when you're in the store and can send you coupons to your phone. There are more eyes on you now,” says Sherry.
Although institutions would argue that customers have to opt in for this sort of location-based messaging, many consumers might not even realize they have given such permissions. According to the Accenture Personalization Survey conducted in 2015, 60 percent of consumers say they want real-time promotions and offers, yet only 20 percent feel comfortable with retailers knowing their location.
Cool: Customers appreciate real-time offers
David LeShaw is among the one in five people who doesn't mind being sent offers based on his daily travels. “Once I was in Los Angeles, grabbing coffee at a large outdoor mall, when my phone buzzed with a geo-targeted offer informing me that there was a J. Crew nearby,” he says. Although he had subscribed to AmEx Offers, that was the first time he had gotten a real-time message via the mobile app. “I was surprised when I got a notification on my lock screen," he says. “I wasn't creeped out, though I could see why some people would be," he says. The message did the trick, though, prompting him to walk into J. Crew and make a purchase.
What you can do to regain some data control
If thinking about this topic has you feeling a bit violated, you can be proactive about finding out more and asking questions, says Sherry.
Here are some things you can do:
Opt out. “You can opt out of your credit card company selling your information, however, you can't stop them from sharing it with their affiliates,” says Sherry. (The FTC's Consumer Information website has a good breakdown of what you can and can't opt out of.) Just call your company's customer service line and ask them how to opt out.
Read up on privacy. Credit issuers are obligated to send you privacy notices once per year. Take the time to read them, says De Mooy.“Looking at the fine print is worthwhile these days. Some companies have made efforts to make privacy policies more readable. Whenever possible, educate yourself about the products you are using.”
Control messaging. If you are ever taken aback by an alert that seems invasive, contact the company to ask about how to limit such notifications, says Hopper. Chances are, there is a way for you to pick and choose the types of messages you receive by adjusting your preferences via the creditor's website.
Don't opt in without realizing what it means. As with LeShaw, you might not realize that signing up for deals or a sweepstakes via a credit card's app or website also means that you're granting other permissions, such as for your location to be tracked, or to share your information with partners. Again, read that fine print to make sure you're aware of what an offer entails.
For those who are really fed up or frightened over privacy concerns, the only true solution is to stick with an all-cash lifestyle and try to stay “off the grid” as much as possible, says Sherry. However, in today's digital world, that's becoming harder to do, and maybe it's even unrealistic.
Plus, you could end up missing out on the other benefits that financial products have to offer. “Unplugging from that system entirely leaves a lot of value on the table,” says Hopper. “It's going to put you at a disadvantage.”
See related: Shopping beacons with targeted marketing messages expand, Credit card companies may be analyzing your voice
