Business Ethics for Customer Data

Many computer users are reluctant to engage in online shopping, banking or investment transactions for fear that their account information will be stolen. According to the Identity Theft Resources Center, between January 2005 and April 2018, there were 8,870 breaches and 1,078,674,491 records exposed to bad actors. A breach is defined as an incident in which an individual name plus a Social Security number, driver’s license number, medical record or financial record (e.g., credit card, debit card) is at risk of exposure, either in electronic or paper format.

Meanwhile, recent news has shed light on the fact that the risk of having personal data related to social media websites is perhaps even more widespread. In April, Facebook announced that the data of 87 million users of the website was unlawfully used by political consulting and data brokerage firm Cambridge Analytica. Of those 87 million people, more than 70 million are in the United States.

The Facebook data was harvested via an app called This Is Your Digital Life. The app paid participants to take a personality test and consent to have their data collected. However, the app did not disclose that it also had access to and collected information about the participants’ Facebook friends.

As is often the case, the world of high technology has outpaced the ability of government agencies to monitor and regulate new innovations. We must often wait until civil liberties are impinged and damage is done before the negative impact of new technology becomes known. Unfortunately, there are presently no online privacy laws in the United States, so there is little to stop companies from using consumer information in whatever way they please.

Many retail companies use marketing, promotions and other business tools to effectively collect large amounts of data in order to reach customers more effectively. However, some also sell that data as a revenue channel. Then there are other companies (data brokers) that use data-gathering tactics for the sole purpose of collecting personal information and then selling it to other companies for their marketing use. All of these practices bring up a myriad of ethical questions regarding privacy and data ownership.

While some states limit the ability to tap information, nearly everyone has publicly accessible data via real property and tax assessor records, court filings, recorded liens and mortgages, driver’s license records, motor vehicle records, voter registrations, telephone directories, real estate listings, birth, marriage, divorce and death records, professional license filings, recreational (hunting and fishing) licenses, and Census demographic information.

Social media sites then supplement this data with consumers’ names, age, gender, location, schools attended, companies worked for and any other personal information, photos and videos they willingly share. (If this causes concern, learn how to delete your Facebook account here).

Some social media websites are designed to provide a platform where people can share stories about their families and/or health. The underlying purpose of this business model is to compile and sell information freely offered by participants. For example:

• GoodParentingToday.com
• T5HealthyLiving.com

These are just two of 17 websites owned and operated by data brokers.

It’s important to be aware of the common tactics used to accumulate personal information either without your consent or without realizing you’ve given it through participation. Any time that you enter your name, email and other contact information in exchange for a promo discount, news feed or other “free” offer, be aware that your data is being collected specifically for a consumer database that might be sold and used by companies you do not wish to hear from.

Also recognize that companies collect your web browsing history. In other words, they can compile data based on what websites you visit, news articles you read and products you buy or even just browse. They can tell where you bank or invest by how often you visit those websites and how much time you spend there.

You might hear that one way to avoid having your browsing history tracked is to open an “incognito window” (or the like) offered by some browsers. However, all this does is eliminate cookies and tracking data from being stored on your personal computer. Where you visit and what information you provide to those websites are still visible to the companies tracking participating users.

These articles are intended to provide general resources for the tax and accounting needs of small businesses and individuals. Service2Client LLC is the author, but is not engaged in rendering specific legal, accounting, financial or professional advice. Service2Client LLC makes no representation that the recommendations of Service2Client LLC will achieve any result. The NSAD has not reviewed any of the Service2Client LLC content. Readers are encouraged to contact their CPA regarding the topics in these articles.

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