Evan Schuman's StorefrontBacktalk

The point here is that stores that collect data–any data–may be deemed to “know” what is in that data. And once you “know” something, this may create a duty to act on what you “know.” Have facial recognition software linked to a CRM database? Great to know your customer. Unless that customer is a registered sex offender trolling the store. Now you “know” that John Smith, who happens to be a registered sex offender, is in the children’s shoes area. You may even “know” (because it’s on the Internet, right?) that John Smith is an offender. Duty to act? Who knows. But the collection and aggregation of data for business purposes may imply a duty to use that data for other purposes as well.

In 2004, Kroger was sued by a customer for failing to notify her about a recall of tainted meat. The customer alleged that Kroger had her contact information in its CRM database, and when it learned that the meat she had bought (and it had a record that she bought it) may have been tainted by mad cow disease, it had a duty to search its CRM database and notify customers of the recall. Kroger countered by alleging that its CRM database was not nearly sophisticated enough to do this–and that by the time the company looked up the names and addresses of all purchasers who bought the potentially tainted beef, the consumers would have already consumed the product and the damage would have been done.

Fast forward to 2013. CRM databases are much more powerful and much more accessible. Customers register their cellphone and other contact information. Customers receive SMS and other alerts from merchants about sales, specials and other information. Big data allows merchants not only to know past customer behavior, but also to predict future behavior. Location-aware applications may allow merchants to know where a customer is, where they have been, and where they are heading.

The collection and use of this information for business purposes will undoubtedly create a duty to use the same information for other purposes as well. Product recalls are just the start. Just as Target was collecting information on consumers such that the company was able to determine that customers were likely to be pregnant (and target ads on that basis), such information may impose a duty not to sell (or maybe just not to target for sale) alcohol or certain over-the-counter drugs to those people. I can imagine Target being targeted for litigation for fetal alcohol syndrome saying, “You targeted me for alcohol sales when you knew I was pregnant.” Acting like a nanny over your customers creates a duty to act like a nanny.

You know all that great CRM and other customer data you are collecting? Names, addresses, email addresses, video and facial recognition, cellphone records and the like? It’s all great for making money. It also may create new duties and new liabilities galore. And all of this may keep lawyers in business for many years to come.

In addition to the duty to act on the data (or patterns of data) you are collecting, entities that collect data also have a duty to responsibly store, protect and limit access to that data. So the bottom line is to collect what you need, use it responsibly, and then get rid of it. And be careful what you collect–it may come back to haunt you.

If you disagree with me, I’ll see you in court, buddy. If you agree with me, however, I would love to hear from you.