Americans don’t trust marketers to guard their private data

Online Privacy Breaches 2013-2014Amid all the excitement about the revolutionary potential of Big Data, it’s worth remembering that not everyone agrees that micro segmentation and one-to-one marketing are such great things.

A pair of new research studies should serve as a warning. A survey of 1,000 U.S. citizens by the German research firm GFK found that nearly two-thirds said they distrust marketers and advertisers with their personal data. Among people over 50, the distrust level approaches 80 percent.

Asked to rate their trust in 23 industries and professions to handle their personal data responsibly, respondents ranked marketers and advertisers dead last. Healthcare providers, online payment systems, online retailers and banks scored best. More than half said credit card companies, social networks, marketers and government agencies need to change their approach to managing private data.

These findings dovetail with a study released last week by Pew Research that found that 18 percent of online adults Americans say they’ve had personal information stolen compared to just 11 percent in the same study a year earlier. More than one in five said they’ve had an email or social networking account compromised without permission. More than half said they’re concerned about the amount of personal information that’s available about them online – up from one-third in 2009.

In short, consumers are getting increasingly edgy about sharing personal information with institutions. Recent events like the massive credit card breach at Target Corp. and the Heartbleed bug do nothing to allay their fears.

The Benefits Trade-off

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Experience has shown that people are willing to give up personal information if they believe the benefits outweigh the risks. We share our location with our navigation app because it gets us to our destination more quickly, even though that information could also be used against us. We allow a waitress to disappear for five minutes with our credit card because we believe most people are basically honest.

But our trust thresholds are clearly getting lower. Futurists like to talk about a retail experience in which descriptions, discounts and even inventory on the shelves will be customized to the individual shopper. It sounds cool, but is that what shoppers really want?

The Atlantic suggests that data analytics could open the door to a modern form of “redlining,” in which people pay more or are denied service because of factors over which they have no control. State Farm offers discounts to customers who agree to let the insurer monitor their driving patterns. It’s an innovative program, but what if State Farm were to use that information to raise premiums for people who frequently drive through high-crime areas?

The lines between personalization and creepiness have never been fuzzier. Complete transparency and continuous listening are the only reliable defenses. You should continue to test the limits of customer tolerance, but be prepared to pull back if you overstep your bounds. It’s better to say you’re sorry than have to admit you’re guilty.