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How Credit Card Companies Can Predict the Future

January 20, 2012
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Who have you told you are pregnant? Who have you told you are having marriage problems? Well you should add to that list your credit card company, Target and many others. These companies have gone beyond just using your data for basic trend lines of sales, to a point where they can predict your future.

That’s right, predict the future. No, your credit card company is not psychic, scary as that thought would be, with enough data a company can predict what is going on in your life. From the Huffington Post: “According to Marissa Meyer at Google, some credit card companies can now use your purchasing decisions to predict whether you’re going to get a divorce with 95% accuracy — two years out.”

That’s right, two years out. Why a credit card company would want that information is for them to know and us to ponder (increased risk of credit issues?), but what it shows is that we spend so much of our lives filling vast warehouses with data about ourselves, and big companies have finally started connecting the dots. Quite literally it seems. Purchase A + Purchase B = Divorce in two years time.

This opens up all sorts of ethical issues that we as a society have yet to deal with. For example, we generally have a right to privacy, but do we have a right to the privacy of the inferences that could be made about us? How about those little lines in privacy documents where we let a big company sell our data to another company, do they sell inferences too?

Pregnancy is a very personal thing to a woman, but not personal enough for Target in the USA to stay away from trying to predict it. With great success mind you. Great New York Times article about it here. Essentially having a baby means that a woman throughout her pregnancy will purchase certain items at certain times in her pregnancy. Targeted marketing coming in your direction little lady. And hopefully a long-term customer for Target in the sweet spot for any company: someone who is buying necessities not accessories.

In the article it also talks about not creeping out the recipient by hiding that they were targeted (ok I’ll stop the punning), this is a whole other kettle of fish; making people think their decisions are a ‘choice’. Not what I am here to talk about though.

So with enough data, inferences can be made about you. Not just about purchasing decisions, but about some very personal parts of your life. Yes the goal (at least in Target’s case) is to make money and long-term money at that. The phrase that comes to mind is “mission creep”. A large data company has not just data about you, but has started making inferences about you too, now that is valuable. My guess is that this practice is very large in the personal data world, but we only hear little snippets of it from time to time.

The other obvious area of the power of inference is national security and law enforcement, and I am sure it is being used widely, but the ethics of catching bad guys is less murky than trying to turn a profit.

Is all this so bad? Not necessarily, but mission creep often pops up in unexpected ways. Does your credit score change before you get divorced but after the credit card company thinks that it is on the cards?

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