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Creepy or Cunning: The Ethics of Location Data

bbender - May 16, 2017 - 0 comments

Creepy or Cunning: The Ethics of Location Data

Since the purchase of your very first smartphone, you have been creating location data. Whether you realize it or not, that little device and many of the apps within it know your next move better than you do. And with 77 percent of Americans now owning a smartphone, the amount of location data available is incredible.

Until recently, location data has been used (in the marketing field) to send promotions and offers to customers while they are visiting a retailer. For example, a department store may use location data to send in-store customers promotions or offers to encourage a return trip or additional sales. Now, marketers are kicking things up a notch with what the industry calls, “Location Data 2.0,” which takes examining customer behaviors to another level.

Location Data 2.0 examines consumer trends to predict and influence future behaviors. It’s more than being at the right place at the right time, it’s being at a place because you were recently at another. For example, location data may show that a certain group of users always goes to the pharmacy after leaving the grocery store. This data could be used to create custom offers tailored to that habit. Location data can also be used to determine how often a person visits a business and what circumstances (time of year, coupons, in-store promotions) influence their decision.

In 2013, an MIT study found that it took only four location data points to trace anonymized mobile phone location data back to a single individual. Suffice to say, this data has power.

This phenomenon has created an entirely new sector for mobile ad firms and location data players. Many have expanded their offerings to include targeting and campaign measurement services that use location data gathered over time, revealing patterns of people’s whereabouts. Never before have businesses had access to such sophisticated information about their customers, and the industry has been quick to adapt. Now, mobile tech and data firms are investing resources in creating ad products and services that use location data, but at what cost?

The ethics of tracking users’ whereabouts is questionable. But in the US, it’s not illegal. Most mobile applications rely on users to opt-in to allow location tracking. Once they’ve done that, mobile data firms are free and clear to collect location data to their hearts’ content. Laws related to the right to privacy, guaranteed under the fourth amendment, focus on harm. Claiming that the long-term collection of location data inflicts harm is not likely to stand up in court.

Conversely, this type of location tracking does not fly in Europe where privacy laws are much stricter. In fact, many US companies won’t even attempt these tactics in the EU. There are plans to further strengthen Europe’s privacy laws in 2018, requiring “meaningful consent” before an application can begin to collect a user’s location data. The simple opt-ins used in the US to gain access to location data will not work under the EU’s planned regulations.

Industry has somewhat stepped up to the plate when it comes to self-regulating this information. Many firms have pledged to not use sensitive data, including information about a users’ sexual preferences or medical history. These are steps in the right direction, although industry-wide practices, or even government regulation to ensure ethical use of location data would create a universally accepted standard.

Regulating location information would prevent data from being used for unsavory purposes. Without oversight, data could be used in ways for which it was never intended, like a prospective employer examining a candidate’s location data to determine their worthiness for a job, instead of focusing on qualifications and merit.

Bottom line—location data is being crated and collected at an exponential rate, albeit with little user control over how its used. Predicting behavior based on long-term location information isn’t a bad thing. In fact, it has the potential to improve consumers’ experiences and increase businesses’ bottom lines. Who knows how far-reaching its (positive) impact could be?

This technology isn’t going anywhere, it will continue to grow and likely become a key resource for businesses to learn about their customers. A word of advice… proceed with caution.