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Smart Stores: Consumer Monitoring in Exchange for Your Information

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At a Walgreen’s cash register the other day a catalina printed out along with my receipt. I got excited, as these are normally for products that I use. However this time the catalina was $4 off on any (1) Stoppain® Pain Relieving Product. Ah—they must have thought I had pain from all of the low-dose aspirin I’ve been purchasing for my grandparents. Looks like they clearly have tracked my purchases but were not able to make the distinction between what I would typically purchase for myself vs. what I would typically purchase for my 70+ year old grandparents.

Retailers and manufacturers have developed some pretty crafty ways to monitor and target consumers over the years, like the example above. And people who hunt down deals (frugal people like us) appear to be the ones who are most monitored given the nature of how this technology works. Those of us who use loyalty programs, credit cards for the reward points, and exchange emails and mailing addresses for great coupons are providing the most amount of information. We are typically happy to do so because we either don’t know how much information is being tracked, or we really enjoy the deals and don’t care. Some of the deals are amazing—coupons for free products—and we may even question whether or not what we are seeing is another coupon scam. However, companies are gaining something much more valuable than the free product they lose in the process. Companies are gaining information that can lead them right into their target consumer’s home.

While I will continue to sign up for deals probably until I need low-dose aspirin for myself, I am a big proponent of knowing exactly how I am being monitored and what kind of information is being gathered about me. What kind of valuable information are we giving away for discounts?

Customer Loyalty Cards

Think of customer loyalty cards as a bugged gift handed to you by an undercover FBI agent. Loyalty cards are a two way street: you get discounts on products, and retailers get information on the types and amount of products you are purchasing, as well as the frequency of those purchases. This information is used to target you for certain discounts and products with such things as catalinas (like the one I received), ads and even prizes. This information is also used to select products for the store to carry and to discontinue, as well as to determine how to use shelf space. Pointer Media Network, an offshoot of the company Catalina Marketing, claims to follow the purchasing habits of 76% of US households through the use of customer loyalty cards.

Even if you pay cash, by using the discount loyalty card your purchases/amounts/frequency are still being tracked. Consequently by not using the loyalty discount cards, you are losing out on savings…so it’s almost like you are paying a fee to have your information kept confidential.

By Cellphone

There are location-based applications for Smartphones that tell retailers where you are located in regards to retailers that sell their products. PepsiCo Foodservice uses one called Foursquare, which gives PepsiCo a live notification when its customers are close to one of its retailers so that the company can send an offer to the customer’s phone and lure them into a store or restaurant. Starbuck’s and Macy’s are also using these location applications, which tell the company more than just your location in vicinity to their retailers; they actually track your every move. Consumers are electing to sign up for these programs because they offer rewards points/badges, just like customer loyalty programs (except these have a built-in GPS).

Foursquare and Shopkick are two known apps with large corporations signed on.

By Credit Card

We’ve discussed here before about ways that credit card companies monitor customer’s data. To recap, credit card companies profile users in order to thwart future financial catastrophes. If they think you are a big enough risk (gambling tabs, alcohol purchases/frequenting bars), they can increase your interest rates or decrease your limit by just giving you a notice (a number of days in advance by law). By monitoring the types of products and services consumers are using, they can also target you for coupons from stores where you frequent.

By Returns

I recently discussed sub-par return policies, most of which were put into place to counterbalance people taking advantage of return systems. Now I’d like to discuss how your returns are tracked and monitored by retailers.

The Retail Equation is a service that tracks who returns items, what those items cost, and how often they are returning items. Retailers who use this service, such as Macy’s, will likely ask you for your driver’s license or to fill out a form when you are returning an item. The Retail Equation uses a variety of sophisticated systems in order to do this, such as Verify-2 which uses predictive algorithms and statistical models to distinguish between genuine returns and those by people who are committing return fraud. They also use a system called Receipt Verification where the cash register person enters data into a database that is then referenced against a chain-wide database to determine if the receipt is normal and if you are a “normal” returner.

You can call The Retail Equation at 1-800-652-2331 if you are curious as to which stores are tracking you. You can also get your Return Activity Report and see how many returns you’ve made recently that were tracked by retailers (most likely you will only want to look this up though if you have been denied a return or an exchange by stores who use The Retail Equation).

By Online Shopping and Search Engines

Online retailers have got you tracked, to say the least. They take advantage of cookies and web bugs to conduct online behavioral tracking. They can track every site that you visit, the length of time that you stay on that site, what you are looking at, click-through responses to advertisements, the website you came from before going to a certain website, how long you linger over a product description, etc. All of this data is stored in our profile, which is a number ID. This information is collected by retailers to give you targeted deals and advertising (this certainly explains why I always see advertisements down the right hand sidebar of my hotmail account for stores that I have visited). Even online grocery stores such as Safeway use cookies. Check out Safeway’s privacy policy where they explain how they track you: “We aggregate information through cookies, or alphanumeric identifiers that we transfer to your computer's hard drive through the web browser. This allows us to automatically collect your computer's network address and operating system, the site from which you linked to our site, the time and date of your visit, how you use one of our services and what products you purchase. This helps us to recognize you, customize or personalize your shopping experience and store items in your cart between visits. It also allows us to aggregate demographic and statistical data and compilations of information that do not include personal information and provide this information to our partners and service providers…”

Search engines provide an integral part to this online consumer monitoring equation. In fact, when I recently signed onto the new Bing Rewards program, I took a closer look at the terms and agreements only to find this, “To provide the Rewards program, record your credits, protect against fraud, and improve Bing, we may store information about your searches, but not the search terms, in association with your Rewards account. Bing Rewards may use the data collected through the Rewards program including the redemption center and information collected and associated with your Windows Live ID, to customize your Bing Rewards experience.”

By Product Registration Forms

Many appliances ask you to “register” the product (typically a postcard-type survey included in the packaging). While registering a product has benefits such as providing contact information for you where a company can reach you in case of a product recall, the rest of the survey gets specific for lifestyle characteristics and demographics. Questions may include gender and ages of any children in household, type of credit cards used, where product was purchased, whether you rent or own a home, how the product will be used, leisure-type pursuits, etc. This information, coupled with your name and address, is very powerful for manufacturers. And in many cases, the postcard address is not made out to the company, but to a data aggregate center!

Also note that even though it is implied that you have to fill this form out and return it for purposes of a warranty, you can just fill out the information you are comfortable with, or keep your receipt (in a lot of cases the receipt is what is needed for the warranty). Read carefully to determine how to get the warranty for each product.

Will I Change My Deal-Seeking Ways?

I have to admit, I had no idea of the extent of information that others are collecting on me in exchange for discounts, coupons, and deals. Will I change my habits completely and go off the consumer radar? Probably not; but this gives me a lot to think about. Just how much is a discount truly worth? We’ll take a deeper look at data collected by the above methods that has been used against consumers in court cases and sold to other companies on Wednesday in order to make a more informed decision.

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Amanda L. Grossman is a Certified Financial Education Instructor, Plutus Foundation Grant Recipient, and founder of Frugal Confessions. Over the last 10 years, her money work helping people with how to save money and how to manage money has been featured in Kiplinger, Washington Post, U.S. News & World Report, Business Insider, LifeHacker, Woman's World, Woman's Day, ABC 13 Houston, Keybank, and more. Read more here.

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