Another problem can crop up when businesses don't follow their own privacy policies, as happened recently with messaging app vendor Snapchat. "The FTC is quite tenacious about companies violating their own privacy policies," and has created a body of common law through a series of consent decrees, says Adler at Metanautix.
Using data the wrong way
Businesses need to consider how private the data is to the individual and how perilous to the consumer the outcome might be if the data is divulged in unexpected ways, Adler says. He cites retailer Target's textbook case of unwittingly sending a mailer targeted at expectant mothers to a pregnant teenager before her father knew about her condition.
Target used analytics to determine that there was a high probability that the woman was pregnant, and had assigned her to that category. "They knew which customers were pregnant based on what they were buying. And that's where the conversation ended," Adler says. But the retailer failed to think through the implications of sending targeted marketing materials that clearly implied that the customer was pregnant — a sensitive subject that the customer might not be ready for others to know.
It also feels a bit creepy, says Jules Polonetsky, executive director of the Future of Privacy Forum. Marketing is about having a relationship with the customer, he says. "Where it breaks down is when marketers don't understand the boundaries of those relationships. Here was this very personal experience and the user had no clue that this analysis was happening."
Marketers need to bring people along rather then let them uncover what may seem like unpleasant facts, he adds. For example, a few years ago Orbitz users were shocked to discover that visitors using a Mac were shown pricier vacations and accommodations than those using a Windows PC. "People were surprised and outraged," he says, but Orbitz might have avoided the problem had it been more transparent about how the recommendations were made — and why — at the time the user viewed them.
Similarly, misunderstandings over variable pricing practices online by Staples drew fire, in part because customers were left in the dark as to what the retailer was doing and why. Online businesses don't selectively raise prices when and where they can get away with it, says Jennifer Barrett Glasgow, chief global privacy officer for data aggregator Acxiom.
"In 40 years in this industry I've never seen an instance where someone was charged more than the published price," Barrett Glasgow explains. Most of the time, "the question is, will I get a discount?" The answer might depend on factors such as the customer's proximity to a brick-and-mortar competitor. But absent any kind of explanation, people can assume the worst.