Digital data sharing continues unabated

Scandal involving Facebook and Cambridge Analyticaa is probably the worst form of digital mishap in recent history. Personal data sharing between the UK-based political consulting firm Cambridge Analyticaa and the social media Facebook eventually led to the closure of the former and caused severe setback to the latter.

Facebook, the world's largest social media, entered into data sharing agreement with Cambridge Analyticaa which allegedly used millions of personal information in the US election. People know very little or do not know at all about how US election has been influenced or impacted by using personal information of millions of Americans who have Facebook account.

It may be hard to believe that election in the US can be influenced by a third party, particularly outsiders. However, believe it or not, it has happened and therefore, the concerned authorities, especially both US and UK government, have taken it very seriously and started investigation. As a consequence of this personal data sharing scandal, the clout of Facebook diminished for the first time in its history. It publicly admitted to the misdeeds. Even the CEO of Facebook, Mark Zuckerberg, personally appeared at the US Senate Committee hearing, testified and apologised for his company's wrongdoing. Previously, many affected countries, including Germany, urged the Facebook to take preventive measures against the use of the company for many allegedly harmful and immoral activities but it did not pay any heed. At the same time, Cambridge Analyticaa, admitting to their involvement in such immoral activity, shut down their company's operation. Following the spread of Facebook's data sharing scandal, this company's share price went down record low and investors across the North America were badly affected. It was presumed that from this data sharing incident, people concerned with digital world will take good lesson and at least some regulatory measures will be undertaken by the US and other developed countries in order to streamline and discipline this unbridled move of the digital world.

Unfortunately, it has not happened so far. No tangible measures are found to have been taken to regulate the digital world and thereby prevent the abuse of people's personal information except the enactment of GDPR (General Data Protection Regulation) by the European Union. As a result, this malpractice is continuing unabated and emergence of most sophisticated form of data sharing approach in the market is a new dimension where Cardlytics is the lead player.

SHARING PERSONAL INFORMATION: Data sharing has been in use by the digital world for long. It is believed that data sharing has been taking place since when many digital companies started offering free applications. Apart from social media, many other companies like Yahoo, Gmail, and Hotmail are offering free email services. Google is offering free search and even some device apps viz. WhatsApp, Viber, Instagram are offering free chat/calling. People may think that in spite of proving free services how they are making money. These companies are not only running huge establishment to offer these free services but also generating enormous revenue for their companies and therefore, world's highest cash-rich and most profitable companies belong to these technology groups.  Only advertisement cannot be the source of such skyrocketing revenue generation. There must be some other sources of data sharing or selling of personal data could be one. My friends and I myslef periodically receive many lucrative sales offers of buying flat and visiting attractive tourist spots in many Asian cities including Dhaka, investing in high yield stock/bonds etc., through personal emails and phone calls and even text messages. Now question arises, we live in North America, so how Asian-based marketing companies are getting our personal information including email addresses, home and cell phone numbers. Of course, they are receiving these from some companies who might have collected them from us through offering some free services. So, selling or sharing of personal information by the digital company is not new at all. People neither know about it nor feel concerned at all about using their data for some other purpose.

The scandal involving data sharing between Facebook and Cambridge Analytica got leaked and spread out across the world very fast because influencing / affecting the US election was attributed to this wrongdoing. Otherwise, it might remain out of the scene.

CARDLYTICS'S ROLE & HOW DATA SHARING WORKS: Cardlytics is the latest version of commercial data sharing in the present-day digital world. Cardlytics Inc. is a US-based company, which deals with personal data in the commercial world. Ten years ago, Scot Grimes and Lynne Laub jointly established this company which went into public at the beginning of this year. The company studies people's personal behaviour of spending, using their debit and credit card information.  This company usually enters into agreement with various financial institutions including banks for either sharing or purchasing customers' data, mainly credit and debit card activities from banks based on revenue sharing terms and conditions. The purchase dates are subsequently analysed and categorised to determine how people use their debit or credit cards for spending, basing which they develop some advertising coupons which are delivered to the retail store owners or sellers. For example, after analysing purchase data, Cardlytics identifies some customers who usually go for vacation twice a year, of which one is in South American countries, while the other is in European countries. They also try to find out what type of airlines they use and in what category of hotels they stay. Based on their findings, they subsequently communicate with those hotels and airlines which then make alluring sales offers to woo those target customers. A certain per cent, say 4.0 per cent, of the revenue generated on the successful sales received from those data sharing advertisement is paid to Cardlytics Inc., which then pays part of it to the bank with whom data sharing agreement has been signed. In addition, bank's revenue multiplies as the use of their credit card goes high. In this way the trios, viz. data sharing company Cardlytics, banks and retailers are simultaneously benefited at the expense of people's personal data which are now well exposed and confidentiality is being compromised.

BANKS INVOLVED IN DATA SHARING BUSINESS: It is beyond imagination how bank is compromising customer's personal information which must be maintained with strict confidentiality. And this is happening in the US where privacy in every respect is always upheld. Moreover, bank is known as the most trusted partner of the people. People disclose all of their private information to the banks in good faith that banks will never let any party know their information. Even, banks are not supposed to let husband know wife's account balance and vice versa. Now, they are found to share confidential information with third party. This operation is being carried out in camouflage of legal framework or mere disclaimer obtained from the customers in a very tricky manner. As for example, while executing a bunch of documents for receiving credit card limit, a statement of disclaimer is inscribed in miniscule letter fonts which are not visible and as such most people can hardly notice it. This disclaimer gives a kind of immunity to the banks or financial institutions against the data sharing activity. Initially, many banks vehemently opposed it on the ground that they would never allow another entity in their channel; however, they could not continue avoiding the temptation of data sharing business because this kind of data sharing business is gaining immense popularity in the US market.

Cardlytics reportedly analysed last year 1.5 trillions of purchase data for 2000 financial institutions. Bank of America having partnership with Cardlytics has been able to develop a new product called Bank AmeriDeal, which provides the bank's credit and debit cardholders cash back offers at retailers. It is believed that these types of card-linked offers are gaining fast popularity among the banks' card users and some experts estimate that this product would soon capture half of the global digital advertising market. Even recently, two large US banks, JP Morganchase Bank and Wells Fargo Bank have signed deal with Cardlytics Inc which is expected to generate revenue worth USD 150 million for Cardlytics. Following Cardlytics's fast growth, Facebook also took initiative to enter into this commercial data sharing business. Several major banks have, however, instantly rejected this proposal.

Although banks still now did not allow social media to share their customers' information, they allowed other digital companies to share customers' sensitive information. After the scandal of data sharing between Facebook and Cambridge Analyticaa, it was expected that IT giants and corporate world would refrain from data sharing activity but it has not happened as yet; rather this practice is continuing in a different structure. 

Nironjan Roy, CPA, CMA, Banker, Toronto, Canada.

Email: [email protected]