China's Citizen-Behavior Data Grab Is a Cautionary Tale for U.S.

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Shoppers peruse the Tongzhou Wanda Plaza shopping mall, operated by Dalian Wanda Group Co., in Beijing, China.
Shoppers peruse the Tongzhou Wanda Plaza shopping mall, operated by Dalian Wanda Group Co., in Beijing, China. Credit: Tomohiro Ohsumi/Bloomberg
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Imagine if running a red light or forgetting a loan payment prevented you from buying airline tickets or prompted a higher interest rate on a loan. In China, an emerging data gathering and analysis initiative intended to compel good behavior from citizens has resulted in just those sorts of penalties. The Communist Party's "social credit" system has been likened to the dossiers it keeps on workers, but this new initiative, set to go nationwide by 2020, takes government surveillance and the potential for data discrimination -- based on public and corporate data that tracks infractions as minor as jaywalking -- to an unprecedented technologically-advanced level.

A Nov. 28 Wall Street Journal story goes into detail, describing early implementation of the program by local governments:

In time, Beijing expects to draw on bigger, combined data pools, including a person's internet activity, according to interviews with some architects of the system and a review of government documents. Algorithms would use a range of data to calculate a citizen's rating, which would then be used to determine all manner of activities, such as who gets loans, or faster treatment at government offices or access to luxury hotels.

The program currently relies on government data, according to the WSJ story, but there seems to be potential for private corporations to become suppliers of information for the system down the road. China's e-commerce behemoth Alibaba already provides non-personally identifiable aggregated data about online sales to China's statistics bureau.

And, the company's affiliated credit-scoring service, Ant Financial Services, is one of eight firms piloting commercial tests related to the social credit program; that effort assigns "ratings based on information such as when customers shop online, what they buy and what phone they use." The story continued, "If users opt in, the score can also consider education levels and legal records." A high score could yield a reward such as fast security screening at the airport.

"Especially for young people, your online behavior goes towards building up your online credit profile," said Joe Tsai, Alibaba's executive vice chairman, "and we want people to be aware of that so they know to behave themselves better."

Skeptics will chalk this one up to just more overreach by China's surveillance state, something that could never happen here in the U.S. But we should consider China's deep dive into comprehensive data-fueled surveillance to be a cautionary tale. One need look no further than the National Security Administration's PRISM program, which relied on data from companies including Verizon, Apple, Google, Yahoo, Microsoft and Facebook in an effort to prevent terrorism that prompted widespread backlash from privacy watchdogs and everyday citizens.

Whether corporations like it or not, governments want the data they gather. China's documentation on the system refers to internet data as a "strategic national resource," lending even more weight to the concept of cyberspace as a theater for modern-day warfare much the way disputed waters and oil-rich land are.

The Federal Trade Commission is well aware of the potential for discriminatory data misuse that could seriously affect people's personal finances or ability to get a job. In January, the agency published a report on the potential for data analysis to produce inadvertent discrimination by advertisers. And in 2008, the agency settled with Visa and MasterCard marketing firm CompuCredit Corporation, alleging that the company failed to disclose that it used a behavioral scoring model to reduce some consumers' lines of credit if they used cash advances to pay for marriage counseling and items and services at bars, nightclubs, pawn shops and massage parlors.

Remember the good ol' days when all we had to worry about were police cameras in public spaces?