A Special Deal Just For You: The Value of Big Data Continues to Elude Consumers

For a while now, one of the main causes of concern for privacy advocates has been "Big Data," that is, the collection, aggregation and analysis of data, on a, well, BIG scale. This post takes the opportunity to review some specific issues and recent developments in this area.

The exploitation of Big Data for commercial purposes may have negative consequences on individuals’ lives, yet consumers are not yet fully aware of the impact it may have on their privacy and their economic interests. Even more galling, consumers have no way to claim any portion of the profits generated by their data when sold to advertising companies for top dollars.

Big Data Enables Economic Discrimination

One of the most common uses of aggregated consumer data is in online advertising, where the advertisements that users see are based upon their online history. Automated algorithms assess whether a consumer is likely or not to be interested in a particular type of ad, and the opportunity to deliver anad to that consumer is auctioned off on a split-second basis using an electronic trading system. Companies often present this use of Big Data as being advantageous to consumers, as they only see advertisements which are truly relevant to their interests, and thus are less exposed to spam. 

However, as Professor Rebecca Goldin from George Mason University pointed out in 2009, “[u]nfortunately these algorithms can also be used to exploit us.” For instance, computers can also predict which maximum price or rate a particular consumer is willing to pay for a product or service, thus benefiting banks or insurance companies to the detriment of consumers.

Big Data may also be used for price discrimination. The New York Times reported last August that a supermarket is using customers’ data collected through its loyalty card program to customize coupons offered online to various customers, and is considering using the data to offer different prices for the same product to different customers in the near future.

This is possible because coupons are often times no longer clipped, but printed or sent directly to smart phones from the retailer’s website. Online coupons can be tailored based upon a wealth of personal information about the consumer, including the search terms used to land on the page offering the coupon. As a result, the deal offered in a coupon may vary depending on whether a consumer searched for “cheap discount socks” or “100% cashmere socks.”

In the United Kingdom, the Office of Fair Trading launched on November 15 a call for information to learn more about how the use of consumers’ data is affecting online markets, and if such use has any effect on pricing. Let’s hope for a similar inquiry in the U.S. soon.

Our Data is Like Gold, But Apparently it is Not Our Gold

According to a report published by the World Economic Forum in May 2012, “personal data represents an emerging asset class, potentially every bit as valuable as other assets such as traded goods, gold or oil” (p.7).

But if our personal data has great value once thrown into the Big Data pool, we, quite unfortunately, do not benefit directly from this bounty, and the U.S. law does not offer a venue for plaintiffs to claim ownership or control over the use of their data for advertising purposes. In the 1995 case of Dwyer v. American Express, one of the first cases on the use of aggregated consumer data for advertising purposes, plaintiffs claimed that such use of their data by a credit card company was an invasion of privacy (in particular, an intrusion upon their seclusion). The court found, however, that there was no claim because the plaintiffs had voluntarily given their information to the credit card company.

A few years later, in 2001, the Southern District Court of New York held in In re Doubleclick Inc. Privacy Litigation that website visitors did not suffer a recognizable "economic loss" from the collection of their data. The court rejected plaintiffs' arguments that they suffered economic damages for the purpose of stating a claim under the Computer Fraud and Abuse Act, based on either the value of their attent