There’s a powerful new player watching what you buy so it can tailor product offerings for you: the bank behind your credit or debit cards, according to an Associated Press article this week.
For years, Google and Facebook have been creating ads based on your online purchasing behavior. Retailers from Amazon to Walgreens also regularly hoover-up your transaction history to influence your future spending and keep your loyalty.
Now banks, too, want to turn data they already have on your spending habits into extra revenue by identifying likely customers for retailers. Banks are increasingly aware that they could be sitting on a gold mine of information that can be used to predict – or influence – where you spend. Until now, such data has been used mostly for fraud protection.
As an example, think of the places you’ve been out to eat recently and paid, of course, with your credit or debit card. You might soon find your bank dangling a 10% off offer for a meal at those restaurants or others you frequent. If you return and use the bank’s discount offer, the bank would earn fees from the restaurant(s) – both for using the offer and processing your credit/debit card payment.
Wells Fargo, for example, began customizing retail offers for individual customers as described above on November 21, joining Chase, Bank of America, PNC, SunTrust and a slew of other banks who are getting into the action.
Unlike Google or Facebook, which try to predict what you’re interested in buying based on your Internet searches, web visits or “likes,” banks have the secret weapon in that they actually know what we spend money on. According to the credit card trade group CardLinx Association, the data our banks have is perhaps the best predictor of what we’re going to spend on next.
While banks say they’re moving cautiously and are being mindful of privacy concerns, it appears that most consumers are not fully aware of what their banks are up to. Let’s face it: Banks know many of our deepest, darkest secrets – like your medical bills, charitable giving, the property taxes you pay, or your income taxes – just to name a few.
Ten years ago, your bank was like your doctor, minister or your psychiatrist – your bank kept secrets. Yet now that they know how to exploit our purchasing data, they can develop offers intended to influence how and where we spend going forward.
Let me clarify that this is not necessarily a bad thing. If my credit card bank offers me a 10% discount at one of my favorite restaurants, I’ll gladly take it. My point is, most Americans have little or no idea the bank is doing this by digging into where we spend our money.
With this information, the bank can then develop other products you may like. For example, it would have a pretty good idea that you’re about to travel if you’ve just charged a flight or hotel stay. The next step is to make location-specific offers, perhaps for a car rental as soon as you land.
One problem is that banks often don’t explain clearly what they’re doing with your data, even though they sometimes share your transactions with outside data companies. And many banks don’t seek your explicit consent, instead including these programs by reference in general agreements for the card or online banking.
Even though banks only know where you’ve shopped – and not necessarily specifically what you bought – they’re often able to make educated guesses. After all, it’s not likely you’re at a department store for bread or milk or potato chips.
Privacy advocates worry that past transactions could come back to haunt you. Frequent visits to fast-food joints, they suggest, might flag you as a health risk, which could be a problem if your health insurer found out. Auto insurers might grow wary of cardholders who run up large bar tabs. Who knows where this might go?
I should point out that many of these efforts are relatively new, and it’s not yet clear how well they’ll catch on. But be advised that the banks believe this is the way of the future, and they will be working overtime to create new ways to influence your spending to their benefit. It remains to be seen if banks overstep their boundaries and lose their customers’ trust.
The scary part is what they may do with this data going forward and who they might share it with! I point this out only to make sure my clients and readers know what’s going on.
This is why I always encourage you to share my information with others. Everything I write is free of charge, and we share your information with No One. Never have, never will.
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