Privacy Policy as a Selling Point
I joined a company a couple of years ago as one of their programmers. Their idea? Enter the online personal finance space.
At the time, our biggest competitor was (and still is) Mint.com. Mint.com makes no secret about the fact that while they're giving you a convenient web interface to budget, categorize, and track your bank and credit cards transactions, it makes money by analyzing your spending habits. Then it targets offers for bank accounts or loans that it thinks would be beneficial to you, based on your spending.
To my knowledge, they don't analyze individuals. They aggregate all user data and discover broad trends. The offers are based on these trends.
This isn't a problem. For most people, it's worth the trade-off of revealing your financial transactions to an outside company in exchange for helpful offers. But I think there's still a shortcoming in this area, because we have no comprehensive privacy law for the Internet user.
If Mint.com gets your spending history, there's nothing stopping them from sharing or selling the information with whomever they choose. There are no safeguards in place like in Canada or the European Union. The law in the U.S. simply hasn't caught up.
Returning to this company I started working for: Mint.com is free to use. They don't make money from customers paying for service. They make money by data mining and then targeting marketing offers to each user. The company I was going to work for, on the other hand, charged a monthly fee, but we promised never to mine your data.
Now, I'm not saying this because I felt our company was better than Mint. That's not my point here. I bring it up because our marketing department had to figure a way of making this "We Don't Mine Your Data" an appealing selling point. And you know what? It's very hard to do.
The start of any discussion about our product compared with competitors usually began with, "Why should I pay for yours if the other ones are available for free?" The reasons mostly involved our lack of data mining, but how do you explain that to a person? Most people aren't really aware of data mining, and once you bring it up to them, they get uncomfortable.
Imagine a woman asking a man why she should date him instead of another guy. The guy replies, "Well, that other guy has a terrible sexually transmitted disease. But me? I'm clean?" This doesn't make the woman want to date this man. It makes her want to swear off dating altogether and become a nun.
I'm not saying Mint.com's data mining is akin to an STD. It isn't. It's not by itself a bad thing. Again, I don't see the harm in Mint doing what they do. I'm only saying that you can't easily use the "no data mining" as a selling point for an online product, because the conversations are difficult to have with consumers.
This means that the free market is unlikely to resolve the online privacy problem for us. There are several businesses currently competing for different niche audiences in the online personal finance sphere. There is the world of social networks. And so on. In any given market space, no company wants to sacrifice a core competency that all of their competitors have, because you'd lose a competitive edge. The only reason any company would do this, of course, is if giving up the core competency actually gives them a competitive edge over everyone else. And with online privacy, I just don't see that happening anytime soon.
The conversations are just too "dirty".
This is why we need to have a comprehensive online data privacy law. I trust companies to do a lot of things for me, and for these, I'm grateful. But I don't expect them to exercise the best judgment when they make decisions about whether, how, or to whom they disseminate the information they've collected about me.
I don't think this is something we need to worry about, but awareness is helpful. As technology moves forward, I expect to see more court cases arise surrounding online privacy violations. Precedents will be set by these cases, and I'm hopeful that when they do, they fall on the side of the consumer.
At the time, our biggest competitor was (and still is) Mint.com. Mint.com makes no secret about the fact that while they're giving you a convenient web interface to budget, categorize, and track your bank and credit cards transactions, it makes money by analyzing your spending habits. Then it targets offers for bank accounts or loans that it thinks would be beneficial to you, based on your spending.
To my knowledge, they don't analyze individuals. They aggregate all user data and discover broad trends. The offers are based on these trends.
This isn't a problem. For most people, it's worth the trade-off of revealing your financial transactions to an outside company in exchange for helpful offers. But I think there's still a shortcoming in this area, because we have no comprehensive privacy law for the Internet user.
If Mint.com gets your spending history, there's nothing stopping them from sharing or selling the information with whomever they choose. There are no safeguards in place like in Canada or the European Union. The law in the U.S. simply hasn't caught up.
Returning to this company I started working for: Mint.com is free to use. They don't make money from customers paying for service. They make money by data mining and then targeting marketing offers to each user. The company I was going to work for, on the other hand, charged a monthly fee, but we promised never to mine your data.
Now, I'm not saying this because I felt our company was better than Mint. That's not my point here. I bring it up because our marketing department had to figure a way of making this "We Don't Mine Your Data" an appealing selling point. And you know what? It's very hard to do.
The start of any discussion about our product compared with competitors usually began with, "Why should I pay for yours if the other ones are available for free?" The reasons mostly involved our lack of data mining, but how do you explain that to a person? Most people aren't really aware of data mining, and once you bring it up to them, they get uncomfortable.
Imagine a woman asking a man why she should date him instead of another guy. The guy replies, "Well, that other guy has a terrible sexually transmitted disease. But me? I'm clean?" This doesn't make the woman want to date this man. It makes her want to swear off dating altogether and become a nun.
I'm not saying Mint.com's data mining is akin to an STD. It isn't. It's not by itself a bad thing. Again, I don't see the harm in Mint doing what they do. I'm only saying that you can't easily use the "no data mining" as a selling point for an online product, because the conversations are difficult to have with consumers.
This means that the free market is unlikely to resolve the online privacy problem for us. There are several businesses currently competing for different niche audiences in the online personal finance sphere. There is the world of social networks. And so on. In any given market space, no company wants to sacrifice a core competency that all of their competitors have, because you'd lose a competitive edge. The only reason any company would do this, of course, is if giving up the core competency actually gives them a competitive edge over everyone else. And with online privacy, I just don't see that happening anytime soon.
The conversations are just too "dirty".
This is why we need to have a comprehensive online data privacy law. I trust companies to do a lot of things for me, and for these, I'm grateful. But I don't expect them to exercise the best judgment when they make decisions about whether, how, or to whom they disseminate the information they've collected about me.
I don't think this is something we need to worry about, but awareness is helpful. As technology moves forward, I expect to see more court cases arise surrounding online privacy violations. Precedents will be set by these cases, and I'm hopeful that when they do, they fall on the side of the consumer.