Loyalty programs providing incentives and rewards to members are commonplace at the pharmacy, the grocery store, the airport -- even the local frozen yogurt shop.
But one senior U.S. Senator doesn't like them, at least according to a session-ending exchange with a witness and subsequent monologue given at the end of yesterday's Commerce Committee hearing on the data broker industry.
It's unlikely that five-term Sen. Jay Rockefeller, D-W.V. will alter his Do-Not-Track legislation to include curbs on the use of consumer data in loyalty program marketing. For one thing, he's leaving office this year and has said he will not run for reelection.
However, it's worth pondering how common and accepted marketing practices, many of which require consumers to opt-in to join incentive-based programs, are perceived by powerful legislators on Capitol Hill.
Based on a discussion between Sen. Rockefeller and hearing witness Joseph Turow, associate dean for graduate studies at The Annenberg School for Communication, here are seven snippets worth reading:
The NSA is more secure than the data broker industry.
Sen. Rockefeller: Since before 9/11 I've been on the Intelligence Committee, and everyday I wake up with seven newspapers with nothing but NSA headlines, and I'm here to tell you as one of the authors of FISA and PATRIOT Act and all the rest of it, that the NSA is so secure in its protection of privacy as compared to this group that we're talking to, these data brokers. It's not even close.* This affects, as we pointed out, everybody, anybody. Who knows? NSA knows they are only likely to interact at a .0001 percent of people that they conclude need further observation.
Targeting audiences based based on income, ethnicity or education is unfair.
Sen. Rockefeller: But more than that [marketers divide consumers into groups by] race, economic activities, education. And there's something -- I can't prove it's wrong but there's something lethal about it. There's something unfair about it. It's something like, you know, if someone is poor or less-educated, and this is my life, I come from West Virginia. A lot of people face these problems. That they're stigmatized. They have to live with it. The system is stacked against them, and a lot of people are making a lot of money out of it and one of them is data brokers.
Your airline rewards program creates horrible customer experiences.
Mr. Turow: I was at O'Hare and I had to switch planes. One of my planes was canceled. So I went to the customer service place of the affiliated airline. They asked me to put my barcode in and they gave me a number. On the side of me, on the screen, it said, "The amount of time it will take to serve you will be based on your priority in terms of your status with our loyalty program."
Sen. Rockefeller: Interesting.
Mr. Turow: So I personally had a lot of points. I got served pretty quickly, but I noticed there were people who were just sitting there, and that meant that they didn't get the flights that they could have gotten.
Sen. Rockefeller: This is segmenting Americans. It's pre-predicting what will happen to them by virtue of the circumstances into which they fall.
Mr. Turow: And who is valued.
Sen. Rockefeller: And all the research has been done to put them in that situation so they can control how they market and maximize their profit and maybe end up actually giving a horrible experience to that consumer.
Targeting based on health data is "revolting."
Sen. Rockefeller: We heard from [Pam Dixon, executive director at World Privacy Forum] about the lists generated by data brokers from genetic disease sufferers and dementia sufferers to payday loan responders. Products that seem tailor-made for businesses seeking to take advantage of consumers. I hate that. I personally am revolted by that. I've seen it in the treatment of coal miners and their safety. I've seen it in every aspect of life in the state that I come from and elsewhere living abroad. I don't like it. I think it's our job as government to minimize that possibility and to bring out into sunlight what is going on.
It's a "dark underside."
Sen. Rockefeller: [The data broker industry and related issues discussed during the hearing are] serious and I think it's a dark underside of American life on which people make a lot of money and cause a lot of people to suffer even more, and therefore have even lower self-esteem which is not the America we want.
Marketers will prey on baby boomers as they age.
Mr. Turow: I think we're going to have this huge generation of older people in 15 years that are going to be dive-bombed with these kinds of offers and as I was beginning to say, it's going to be more particularized. The thing about that category, Chairman Rockefeller, is that it is a category. More and more that's going to become anachronistic. And what it is going to be is a particular person who can be maybe be more persuaded because of other characteristics that predict that, so that category will be…
Sen. Rockefeller: Including low self-esteem.
Mr. Turow: Yes, and a lot of other things that leads them to be this, that, and the other thing. So you won't even be able to point to the category in a catalog anymore. It will be something that you won't be able to easily track down. And yet those people will be targeted increasingly because of the situations they're under. The same category only divided up into millions and millions of people and personalized.
The data industry can do whatever it wants.
The slogan of one of the companies involved in this investigation [Acxiom] -- it says it lives by the following words, "Just because you can, doesn't mean you should." Unfortunately I've been thinking about this because today's testimony and the Committee's inquiry shows the industry as a whole is falling far short of that standard -- appears to be falling far short of that standard. In fact, it seems to me [for a] number of data brokers the motto is "We can and indeed we will."