While much of our contemporary anxiety over the way personal data are collected and distributed is directed at the government, the more pervasive — and perhaps most insidious — users of personal data are corporations and other private businesses.
In "What Stays in Vegas," journalist and Harvard University fellow Adam Tanner explores how personal data have become "the lifeblood of private industry, the elixir that fuels marketing efforts to compete and expand their businesses."
"Private companies regularly assemble detailed individual profiles on millions upon millions of people with only minimal restrictions," Tanner argues. "The land of the free, fueled by the spirit of free enterprise has become the greatest data collector of all."
To explore the way private companies use personal data culled from public records and provided by individuals, Tanner goes inside Caesars Entertainment. The company was one of the first Las Vegas casinos to make user data, collected through the company's Total Rewards loyalty program, a serious part of their marketing and customer retention programs.
Along the way, Tanner also looks at other companies, from direct marketers to data brokers, who are making money off the data that most of us provide without a thought when we sign up for yet another apparently free program or service.
Gary Loveman, CEO of Caesars Entertainment, seems like an unlikely mastermind for a Vegas casino. After earning a Ph.D. in economics from the Massachusetts Institute of Technology, Loveman got a job teaching at Harvard Business School.
His research into consumer behavior led to the theory that the lifetime value of a single customer is affected by their satisfaction — the more satisfied a customer is, the more valuable they are to a company. When Loveman started to apply his research to casinos, he discovered that customers didn't show much loyalty to any single casino over time. He suggested that the best way to retain customers was to use data the company was already collecting to develop a more robust loyalty program.
Although Loveman's data-driven approach was contrary to the gut instinct that most casino executives were using, it proved lucrative for Caesars, which now uses data to target individual consumers and uses data-driven insight to predict larger behaviors of casino patrons.
Although "What Stays in Vegas" starts with insights gained from casino data, the book is even more interesting when it delves into the occasionally questionable practices of other businesses that use personal data for profit.
In addition to data collected by casinos, Las Vegas is a trove of public data — more couples marry there than anywhere else in the United States. And the subsequent divorce records provide even more personal details that then become part of the public record, Tanner notes.
While U.S. law does restrict trade of some personal information like medical and financial data and how some types of data can be used for decisions like hiring or granting loans, the rules are otherwise rather thin.
In Las Vegas and other cities, abstractors spend hours each day hunting down public information like home purchase registrations and property history. Abstractors can then sell that information to companies that, for example, sell home alarm systems, giving them a more targeted list of customers to approach.
At the same time, this proliferation of personal data can have positive benefits for companies and customers. Loyalty programs offer regular deals or discounts to customers, giving them a reason to return to a business.
Some insurers will offer drivers a discount in exchange for monitoring their driving habits. At Progressive, about two-thirds of the drivers who participate earn a 10 to 15 percent discount. Bad drivers currently aren’t penalized, but they may be in the future, Tanner writes.
While much of what Tanner shares is alarming, “What Stays in Vegas” also offers some concrete, if rather elaborate, suggestions about how individuals can more carefully protect their personal information — if they so choose.
Experts interviewed for the book suggest disabling cookies on frequently used Internet browsers, making sensitive purchases in person and in cash, and opting out of marketing analytics through credit card companies.
Tanner also suggests a website, www.privacychoice.org, that offers a free privacy dashboard to help set levels on social networking sites like Facebook, LinkedIn and Google.
But ultimately, it seems there will need to be a combination of industry standards and government intervention to be sure that customers can maintain control over their increasingly valuable and available personal data.
As Tanner concludes: “Customers should have the final say in how and with whom they share their data. Privacy tools can help, but they are only part of a solution that protects consumers against possible abuses. Companies have to be open and responsible about what personal data they gather, and government rules may be needed to assure certain intimate data are not abused.”