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Where your personal data goes when you're not looking

Robert L. Mitchell | Aug. 6, 2014
There's a lot of consumer data floating around, but in many businesses it's still fairly disorganised.

And the criteria used for making pricing determinations matter to regulators as well as consumers, says Adler. For example, variable pricing by location might also appear to single out a minority community. "When do price distinctions become price discrimination?" Businesses need to think through that, he says, before they roll out technologies in brick-and-mortar stores as well as online.

Once customers have been identified, he says, it will be possible to use digital signatures to present differential pricing based on whether, for example, a customer's web surfing history shows that they've been comparison shopping online.

Businesses can head off potential issues by providing transparency, allowing customers access to all of data the business has about them, and — most importantly—- using the data the business has appropriately, Adler says. Unfortunately, he adds, "Companies often default to not disclose."

"Data is increasingly a feature, not just a disclosure that I've given you ways to opt out of marketing," says Polonetsky. Rather than rely on the privacy policy exclusively, the user experience for an online service should let users see how and when data is used to "power the product, to market or to connect with friends" Users can then toggle potentially sensitive features, such as location services, on and off in certain contexts to suit their expectations.

What's more, if 90% of your users aren't having a pleasant experience using the default privacy settings, then something is wrong with your strategy, Polonetsky says. The default privacy settings should match users' expectations without requiring them to read through a lengthy privacy policy to find answers.

Data security
American Express has been a model for transparency, and has been upfront about how it tracks customers to make suggestions about what users might like to buy, Polonetsky says, but many online businesses are far less forthcoming. "Everyone pays lip service to transparency, but with some [companies] you have to do a lot of detective work to understand what they are really up to. Sleuthing is not what users want to do to find out what's going on." The future, he says, will belong to the businesses that understand this.

Opening up
Businesses are slowly beginning to respond to at least some consumer concerns about privacy. For example, Facebook recently decided to allow its users to log into new apps anonymously (although one could argue that it took one step back when it manipulated users' news feeds). Some mobile app vendors offer popular messaging services that can permanently erase messages after a user-determined time limit. And Intellius, which sells personal background checks based on public records, lets users see their own data for free — and correct it.


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