Paying the Price for a Cheap Deal – Mobile Coupons, User Data and a Way Forward

“Careless shepherd make excellent dinner for wolf” said American novelist Earl Derr Biggers. Born in 1884, for sure he knew nothing about digitalization but perhaps a lot about human nature. And that includes hoping for effortless good deals, despite common sense telling then and today that there is no such thing as a free lunch, and not even a free drink. Still, it is quite possible that despite his own insights, Biggers himself quite happily got hooked by coupons issued by Coca-Cola founder Asa Candler. Reputedly between 1894 and 1913 one in nine Americans had received one or even two of estimated 8,500,000 free Coca-Colas, in exchange for a complimentary coupon, in most cases mailed to potential customers and placed in magazines. This exchange had apparently all the ingredients of a good deal. No further obligations seemingly to the Coca-Cola consumer, and for the company the promise of a lifelong dedication to its brand.

Coca-Cola’s current stock value is still sufficient proof that Candler’s coupon strategy paid off, at least for the company. Neither the novelist nor the entrepreneur could have known the extent to which commerce would be imbued with irreversible and unstoppable manifestations of digitalization. Immediate online consumption of e-books, on-line banking and e-ticketing for goods and services just form the tip of the iceberg. And last but not least coupons have been replaced by consumer payback / loyalty cards. Most recent developments already make these plastic cards look antiquated. The future is about downloading apps like Stocard that bring them altogether onto consumers’ mobile devices. More than ever, though, it is questionable whether consumer loyalty cards also pay off for consumers. Using them, they hand over unsolicited and, in effect, for free the access to their own personal data. At most in exchange for a reward, too small to be taken seriously[1] and called a good deal.

It is questionable whether consumer loyalty cards also pay off for consumers. Using them, they hand over unsolicited and, in effect, for free the access to their own personal data.

When buying mobile devices such as smart phones and tablets, consumers acquire the entire hardware. However, the software is not their property. And often enough, the software such as apps shuns to inform that consumer-produced content including personal data and content derived metadata – like telephone number scooped from text content – is transmitted without prior consent to others. The effect is reinforced by consumers lacking the awareness for the value of their data and not perceiving ownership of their data as a property right. Changing the situation will require a phased multi-facetted approach, focusing on more choices for consumers and raising their awareness. The tools will be competition and education. The key stakeholders will be the application store platforms such as Apple, Microsoft, Google and application developers on the one hand, along with consumers, consumer associations and regulating authorities on the other hand.

In view of the capitalist environment, in which these changes will have to occur, waiting for a self-regulatory based process that makes industry defend consumer rights let alone share profits with them would be asking the frogs to drain the swamp. Also, despite all good faith in consumers’ purchasing power, they by themselves will struggle if not fail to catch up with the key industry stakeholders. This is where, in a market place characterized by enormous inequalities, consumer right watchdogs and regulating authorities come into play. Examples for the US are the Future of Privacy Forum and the Center for Democracy & Technology and the Federal Trade Commission with its dual mission for protection and competition. All of them already made it very clear to industry that merely complying with applicable laws and regulations is not good enough for meeting consumers’ expectation and winning their trust.

To that end, their recommendations include just-in-time-disclosures obtaining explicit opt-in rather than implied consent before allowing apps to access sensitive information and privacy dashboards enabling consumers to determine which apps have access to different types of information. And last but not least, they also include icons indicating the transmission of personal information or other information more broadly. Such services that will ensure transparency and appropriate consumer choice on how personal information will be collected, used and transferred, might eventually become a purchase incentive.

In the short term for instance, the beginning could be about having the choice between a “free” or assumingly cheap app and a payable or pricier one in exchange for meeting aforementioned services. Should these turn into standards to be met by industry, either because the regulator or market demand forces gain the upper hand, the ultimate competitive advantage could be with those companies that even go a step further and offer consumers a fair “deal”: Their valuable data in exchange for money. This may sound rather odd in the ears of those fighting for consumers’ privacy rights. However, the extent to which some people, notably so-called digital natives already now voluntarily open up their personal data to the views of others is indicative of how perception of privacy has changed. Thus, getting in on the profit, could be another incentive raising consumers’ appreciation to the new currency which is data. But as the market is not yet mature enough for this new “deal”, it could be stimulated by increasing awareness about the currently invisible act of expropriation through education. Its purpose is to offer knowledge about consumers’ role in the value chain of a data-driven economy, including how consumer data generates revenues either directly or through resale to third parties.

Fortunately the consumer can count on consumer associations to enhance consumers’ knowledge about the wider financial and economic implications of industry’s breathless race into a fully digitalized environment. However, the last decades not only shifted the focus from protecting to informing and educating consumers but also to the perception of consumers’ own responsibility. And this consists of making use of the available information, allowing for instance to withdraw and withhold data. Exercising this right, may however require some time consuming tedious efforts.

In truth it must be said that consumers’ wide-spread and deep desire for comfort and a disposition for inertia too often override their own interest and rights – including those of their fellow human beings. As mobile devices and apps offer enormous convenience and have even become indispensable to many people’s life styles, consumers are not really willing to discharge them. And they should not. Neither should they idealize nor demonize industrial products. However, it is in their very interest to see the incompatibility conflict between their care for convenience and industries’ innate strive for profit maximization and exploiting the playing rules to the fullest. Unlikely to be ever fully bridged, consumers are well advised to mitigate this conflict by increasing their sensibility for data as the new currency and the value of better choice of products and services. Choice that eventually will offer even a deal, one that truly deserves to be called fair. In getting there, consumers are not alone, but it also requires them to make a real effort. They cannot afford to be careless about their rights.

Birgit Hütten works in Brussels for an inter-governmental organization. Her fields of interest are those relations and factors whose alleged insignificance for the overall developments needs to be questioned with a recent emphasis on robotics and industry 4.0. She has a Magister Artium (University Bonn) degree in Japanology and Comparative Religion and a Master in European Administrative Management (University of the Applied Sciences Berlin) for which she presented defense related thesis.

[1] Already in 2011 about two thirds of American customers came to this conclusion (ACI Worldwide Study).