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You may not know it, but your credit card issuer makes money by selling data about the purchases made by its cardholders: you and me. WBZ TV, the CBS affiliate in Boston, broadcast an interesting segment Tuesday evening about how banks and credit card issuers make money by selling what they know about their card holders:

"Every time you use your credit card, your bank or credit card company is watching and taking notes. It looks at where you shop, how often you shop, what you’ve purchased..."

I advise consumers to watch the telecast at the WBZ-TV website.

So, what does your credit card company know about you? Think about everything you charged during the past month. During the past 6 months. Groceries. Clothes. Vacation. Personal hygiene. Liquor. Auto repair bill. Junk/fast food. Movies. Bar food and drinks. Doctor copayments. Medicine. Political donations. Cash advances at a casino.

The collection includes the amounts of your purchases and where you made these purchases, too. The collection includes both purchases made online and at brick-and-mortar stores. The collection happens regardless of whether your are a member of a loyalty/rewards program.

Being an informed shopper means knowing all of this. Something to remember the next time you see one of those cute telelvsion ads promoting the convenience of using plastic.

Some consumers see targeted advertisements online when the view and pay their monthly credit card bill. Those targeted ads are based on the prior purchases you made with your debit/credit card,

There are some things I want my credit card company to know well about me. I do want my credit card company to know enough about me to spot fraudulent purchases that are outside my normal purchase area or dollar amounts. So, a certain amount of data collection is good.

If this data collection about card purchases bothers you, experts warn that you can opt-out of some, but not all of the data sharing. Read the privacy statement online at your credit card issuer's website, or the privacy statement enclosed with your last credit card statement. If you want your purchases to remain entirely private, use cash and don't use your debit/credit card.

Comments

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Merchant Services

I am aware that banks collect data from our credit card transactions. It can help them classify the kind of credit card user you are. But didn't know that they actually sell it. I think its really possible and its unethical. But can this be illegal? I mean is there any law regarding this issue?


~Stef

George

Stef:
The Credit Reports section of the August 2010 Customer Agreement, for my Capital One Platinum Visa Card, reads:

"We may provide information about you and the Account to consumer (credit) reporting agencies and others as provided in our Privacy Notice..."

The key word in the above sentence is "others." The Information Sharing section of the Privacy Notice reads:

"We may disclose information that we collect as described above to the following entities:
- other companies in the Capital One family, as described at the end of this notice.
- Financial service providers, such as securities broker-dealers or insurance companies.
- Non-financial companies, such as retailers, data processors, and advertisers.
- Carefully selected business partners (e.g., so they can alert you to their products and services).
- Companies that perform marketing services on our behalf..."

"Data Processors" probably includes companies like Heartland Payment Systems, that process transactions. I wrote about Heartland's massive data breach in this blog. Use the search mechanism in the right column to find blog posts about Heartland.

The above information sharing language seems sufficiently broad for Capital One's benefit. Nowhere does the notice list the other companies by name.

Obviously, you should read the Customer Agreement and Privacy Notice documents your credit card issuers sent to you for the credit cards you use. These legal documents are different than the website Privacy Policy and Terms of Use.

I hope that this helps.

George
Editor
http://ivebeenmugged.typepad.com

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