580 Part IV • The Information Management System
name, address, and credit card number. To take out a loan
from a financial institution, we must provide much more
personal information and allow a credit check so that the
lending institution can decide whether we are likely to repay
the loan. This is quite legitimate and, because we agree to
provide the information in order to transact the business,
there is no invasion of privacy. However, when the business
uses the information for purposes that we did not authorize
or sells the information, serious privacy problems arise.
People differ widely in their attitude toward the pri-
vacy of this type of personal information. Surveys over the
years have shown that about 25 percent of the public is not at
all concerned with these privacy issues, 25 percent is quite
sensitive to loss of privacy, and the remaining 50 percent is
willing to consider trading some privacy risks for other ben-
efits, if given the right to make that decision.
Personal information is so valuable to marketers that
they go to great lengths to obtain it. Purchasers are encour-
aged to fill out and return warranty cards that sometimes
include a questionnaire with questions about age, income,
hobbies, favorite magazines, and so forth. If you enter a
sweepstakes, you might have to fill out an entry form with
similar questions. If you have a special shopper card that
provides discounts at your supermarket, you probably filled
out an application that included personal information.
Credit card records can provide comprehensive information
about your shopping habits. All this personal information is
likely to end up in databases that are used to target market-
ing efforts (see the box entitled “Database Marketing”).
Facebook’s privacy policy has evolved gradually
since its inception. Starting with a simple statement that
your information would only be shared with those in your
group, over the years the policy has grown less and less
protective of your personal data. The reason is clear—
Facebook gets its revenue from advertising, and the greater
the ability to target ads to persons who might be interested
in purchasing what is advertised, the more valuable the ad
is to the advertiser and thus to Facebook. For example,
Facebook cites a very successful advertising campaign for
a rental storage firm that targeted college students going
home for the summer based upon location and year in col-
lege. Another Facebook campaign for a photographer tar-
geted future brides based upon age, gender, engagement
status, and location. The more of your personal informa-
tion that Facebook can use for targeting ads, the more prof-
itable it will be.
When individuals do not know what data are being
collected or by whom or how it is used, they have no control
over their personal information and therefore by definition
their privacy has been invaded. Furthermore, if all these
marketing databases were to be combined with official
information databases and financial information databases
into one database, the result would be a very comprehensive
dossier on each person. So far this has not been done in the
democracies of the world, but it would be possible.
Repressive governments have developed and used these
comprehensive dossiers as a means to control their citizens.E-Commerce Privacy Concerns
We know that unencrypted communications on the Web
can be intercepted and that there are sites that mimic trustedDatabase Marketing
The field of database marketing has been created from the data collected about each of us when we fill
in a warranty card, apply for and use a special shopper card or a frequent traveler card, and apply for
and use a credit or debit card. Credit cards led the way. In the early 1990s, General Motors Corp. joined
with MasterCard to offer the GM Card. As a result, GM now has a database of over 12 million GM card-
holders, and it surveys them to learn what they’re driving, when they next plan to buy a car or truck,
and what kind of vehicle they would like. GM went into the credit-card business not just to build loyalty
and offer cardholders rebates on cars but also because it saw the billing process as a way to harvest
reams of data about consumers.
American Express Co. analyzes the transactions of its millions of cardholders—the stores they
shop in, the places they travel to, the restaurants they’ve eaten in, and even the economic conditions
and weather in the areas where they live—in order to target special promotions to customers through
its billing process. While American Express does not sell data on individual consumers, it has created a
special Business Insights unit which mines credit-card data for consumer trends and sells reports on
these trends to clients.
[Based on Berry, et al., 1994; Schoenbachler, et al., 1997; and iSpit, 2010]