GuestView Column: Private Info For Product Discounts. A Faustian Bargain?

Written by Mark Rasch
July 15th, 2009

Mark Rasch is the former head of the U.S. Justice Department’s High-Tech Crimes Unit and today serves as principal of Secure IT Experts.

Consumers are accustomed to giving up something to get something in return. Usually it’s paying for products or services, or driving out of their way to get bargains. With consumer “loyalty” programs and behavioral advertising programs, consumers are giving up privacy rights in return for promised discounts, coupons or other rewards.

The problem with these programs is that many consumers do not really know what they are giving up and that, if they are dissatisfied with the bargain, they probably have no way of getting back their privacy. Merchants get what they want – intimate details about a consumer’s identity and habits – but the consumer in some cases gets nothing.

Typically, a contract involves a bargained-for consideration: One party gives something up in order to receive some benefit or reward. In the example of a loyalty program, consumers may get discounts on particular products or services in return for allowing the merchant not only to track their purchases and activities, but also to create a database of this information and share it or sell it to others. Thus, merchants are no longer only in the business of selling widgets, they are also in the business of selling information about people who want to buy widgets. In many cases, the latter is much more valuable.

Usually, the only limitation on the collection and use of this information is contained on the individual Web site’s privacy policies under the moniker “what we collect about you…” These policies are difficult to locate and even more difficult to comprehend. Moreover, they are an anathema to the nature of the World Wide Web.

For example, if you want information on diabetes, you simply do a search for the term and start clicking. Most people don’t stop their research to look up the privacy policies of each site. The same is true for merchant Web sites. I would be hard pressed to tell you the difference between the data-collection and sharing policies between,, or, much less make shopping decisions based on these policy differences.


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Why Did Gonzales Hackers Like European Cards So Much Better?

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