Sneaking Into the Data Business

When it comes to Big Data, you're the product. So what laws are in place to protect you, and what are your options?

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About the author:
Theodore F. Claypoole

Transcript

Welcome to Womble Perspectives, where we explore a wide range of topics, from the latest legal updates to industry trends to the business of law. Our team of lawyers, professionals and occasional outside guests will take you through the most pressing issues facing businesses today and provide practical and actionable advice to help you navigate the ever changing legal landscape.

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Welcome to Womble Perspective’s Saturday Series on data privacy. Today we’re talking about privacy law, transparency, and what happens when a platform’s user is the end product. This episode is adapted from an article written last year, but it’s just as true today as it was then.

But before we jump into the episode, here’s today’s cybersecurity tip. How often do you tap “remind me later” when you get a notification that your device is ready for an update? If you’re like most, probably pretty often. But to better protect yourself from cybercriminals, try and take some time to install the update as soon as you get notified. Outdated software makes it easier for cybercriminals to take advantage of critical vulnerabilities that may have been present in earlier versions. And if you want to take a set it and forget it approach, you can always turn on automatic updates.

Now, on to the episode.

One of the benefits of GDPR and similar U.S. state privacy laws is that many companies are forced, cajoled, or encouraged to ask permission before capturing, analyzing, repackaging and selling the information they gather about you. Apps delivered under these new laws call attention to behind-the-scenes data activities, when past versions would have quietly hid the evidence.

So now we’re more likely to see when a website grabs our personal information and to decide whether we like it. Score one for transparency.

It’s common knowledge that the huge companies created by the internet – Google, Amazon and Facebook in particular – were built on a platform of user data, both for internal analytics to hone the services and for revenue generation as user information is sold either directly to other companies or indirectly through serving targeted advertising.  People who run Google searches are not the customers of Google search. Google’s actual customers pay for access to searchers and their searches. Keep in mind: if you’re not paying for a service on the Internet, you’re the product being sold.

So then conversely, if you’re paying for a service, you aren’t the product, right? Wrong. One look at Amazon’s business model shows that Amazon Prime customers – purchasers of books, underwear and chili crisp – are targets of advertising arising from the ecommerce king and its partner companies. But we’ve also always known that Amazon’s deal involved online data. What about companies outside the ecommerce realm that we go to for specific areas of assistance and expertise?

It seems to hurt worse when we learn these companies are treating us like products. For example, diet companies like Weight Watchers have encouraged people to send their DNA for evaluations, making unsupported (and likely unsupportable) claims that a genetically customized diet would help people lose weight. Once the company has the key code to your physical makeup, what will it do with that information? Will it sell that DNA information to others, gather a huge database of customer DNA readings and use it for drug development? Or simply run its own analytics to learn more about effectively marketing to you? Diet companies aren’t saying all the ways they will use this data, but if the ancestry DNA programs are any guide, then nearly all options are on the table.

The diet industry may seem to have their customers’ interests at heart, but these companies have been known to push limits of marketing. The Weight Watchers company was being sued by the FTC for using a diet app to illegally gather information on children as young as eight years old without their parents’ consent. The Guardian wrote, “The FTC alleged that the app’s signup process encouraged younger users to falsely claim that they were above 13 years old, despite text that indicated to children below 13 that they needed to sign up with a parent.” This company has been in the process of recasting itself as a lifestyle brand, including adding a digital community called “Connect” that adds another useful stream of data about its paying customers. 

You also don’t expect your tax assistant to be vacuuming your personal data. The Washington Post undertook a data investigation of the major tax preparation organizations finding the “little-discussed evolution of the tax-prep software industry from mere processors of returns to profiteers of personal data. It’s the Facebook-ization of personal finance.” While there is a federal privacy law preventing tax preparation companies from disclosing the contents of its customers’ tax returns to anyone beyond the taxing authorities, the big tax companies “are asking you to grant them special permission to go beyond these default federal protections and use your return — including your income, investments and mortgage details — to help them upsell you on other things.”

The companies call this customer upselling “personalized service” and promote it as customizing the tax preparation experience to your individual needs. If only they could figure out a reason for you to send a DNA sample, then their data personalization could really take off. DNA has as much use in tax preparation as it does in diet recommendations. The Post reports that H&R Block asks to share your data with its overseas affiliated companies. You can choose not to do so, and you can revoke permission after jumping through some hoops. The Post points out that tax company Intuit “recently acquired Credit Karma, whose entire business model … asks you to pay with your privacy for free services like credit scores.” So it’s clear that tax preparation companies like Intuit see their future revenues arising from treating their tax preparation customers as the products for data-hungry business customers. They’ve gathered a tax-preparing herd, and now they’re milking it.

Other kinds of life advice companies beyond diet and tax-prep are surely moving into this data-rich space, and milking paying customers for more and more economically valuable data. Realtors, accountants, bartenders, feng shui consultants – all of our advisors and vendors can adopt this data centric model. Who knows what your dry cleaner is capturing about your behavior? 

Read your options carefully before entering into an advisor relationship. Make sure you understand what advantages the “premium package” provides, because you’re likely paying for it with both money and chunks of your privacy. If you send or allow collection of extra sensitive information, confirm that you understand what the vendor will use the data for. New laws allow a broader window into the data habits of your advisors. 

Take advantage of the new knowledge.

Thank you for listening to Womble Perspectives. If you want to learn more about the topics discussed in this episode, please visit The Show Notes, where you can find links to related resources mentioned today. The Show Notes also have more information about our attorneys who provided today's insights, including ways to reach out to them.

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