Imagine someone having access to all the purchases you made with your credit or debit card. They know exactly what you bought and track your purchases to send very targeted ads your way. Who has this unprecedented access? Who is sharing it with marketers? The answer may surprise you: Banks.
It's not happening at all banks, but we found some are using your purchases to lure you into spending more money. Each time you pay with plastic they’re watching, analyzing and calculating every move you make to create a profile of your buying history.
When marketing company owner Oren Milgram opened his most recent online credit card statement he found coupon offers mixed in with the rest of his charges—like:
"Save up to 35% on Tax Software" and “Discount Entertainment”.
If he clicks on the ad, a window pops up warning him he will be taken to a third party website. Oren, who even owns a marketing company, says he’s trying to balance his privacy with his love of a great deal. "I was a little bit surprised. I like to see relevant offers, I want to see relevant offers."
It’s called “Target Marketing” and here’s how it works:
When you use your debit or credit to buy something, computer software tracks where you shop, how often you shop, what you purchase.
We contacted the American Bankers Association. They said they weren't familiar enough with the concept to comment. However, Mark Johnson of the Loyalty Marketers Association says some banks make deals with certain retailers and then try to get you to try their products by tracking what you’re interested in. “What that allows these banks and issuers to do is to amalgamate all this information, cross reference that with what they know about your monetary income, your lifestyle and life stage and make more tailored transactional marketing offers to you.”
But privacy experts are waving a red flag—saying watch out! Banks are collecting a tremendous amount of information about you. Justin Brookman from the Center for Democracy and Technology warns, "It's just another potential point for someone to lose info or for hackers to get it."
Brookman says if you don't want banks to share your information--be sure to read and respond to those privacy rights pamphlets that show up in your mailbox. If you "opt out", it protects you from financial institutions sharing some of your info with third parties. "Any internal use they can share with their affiliates or share with other companies under the same corporate control. You can't stop that at all."
Johnson says banks are very careful with your information, and the new ads have been a hit with consumers. Oren actually finds them helpful. "Like most consumers I'm concerned about my privacy but as long as I have a way to opt out or opt in I'm comfortable."
Some states have laws that specify exactly how banks are allowed to use your information. Federal lawmakers are considering legislation limiting how banks can use your information. The Federal Trade Commission is proposing a new "do not track" program, which would allow consumers to "opt out" completely. Paying with cash of course is one way to prevent your purchases from being tracked.
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