Ever thought about what your grocery shopping habits say about you? Well, if you’re a shopper hoping to get extra discounts, signing up for that free loyalty program sounds like a good idea.
However, it’s likely that what you’re really paying with is your personal information.
Many retailers do this, but one retailer is doing it to a scale bigger and in a more sophisticated way than any others – making it potentially a model for others, but a worry for customers.
Derek Kravitz, an investigative reporter for Consumer Reports, joined Texas Standard to talk about what large companies do with the data shoppers willingly provide, how stores track buying habits and the potential risks that comes with the brokering shopper’s info. Listen to the interview above or read the transcript below.
This transcript has been edited lightly for clarity:
Texas Standard: You were telling me that there’s one retailer that does this in a way that is off the charts compared to how other retailers gather this personal information from loyalty programs and such.
What is that company and what are they doing that’s so different?
Derek Kravitz: Yeah, so it’s Kroger. They are the second largest grocery chain in the United States.
They have a data unit in their company. It’s actually a subsidiary called 84.51°, the coordinates of their Cincinnati headquarters, that is way more sophisticated technologically than any other company out there. They collect data and they analyze it in a way that’s just very advanced and they make a lot of estimates and guesses about who you based off that data.
I thought everyone did this sort of thing. You know, you have Walmart’s loyalty program. Many grocery stores do this kind of thing as well.
Why did you want to focus on what Kroger is doing specifically?
Yeah, so not every grocery chain does this. Costco, Trader Joe’s, they sort of build into their brand that they don’t do this. But yeah, a lot of other grocery chains do – and merchants generally.
This is at a different level. When we found out or saw a lot of the information that they collect and how they package it to others to sell, it caught our attention, plus the profits that they’re making.
Increasingly, Kroger is becoming a data company, not just a grocery chain. Almost a third of their net profits at this point comes from alternative sources, not grocery or gas. Meaning that, yeah, it’s gonna be a billion-dollar business soon, a year net.
And that means that with all this data that they’re collecting about their customers, they’re selling it for advertising and marketing purposes to places like Disney or Pepsi or Hulu. But Kroger is just doing it at a scale and doing it in a way that’s just much more advanced and, in many ways, better than other places.
In many ways better, I guess. I’m curious about what might be worse about it, from the consumer’s perspective.
Yeah, so just because it’s better maybe for that company’s bottom line, or more sophisticated in its output, doesn’t mean that it’s good for consumers.
So what it means is many people will get personalized discounts. A lot of people love discounts and it’s a free loyalty program so you’re not paying to be in it. So there’s no wrong extraction there.
Now some people won’t like if the information that’s collected about them results in inaccurate inferences or guesses about who they are.
So we collected sharper profiles from the only state in the country that allows us to get access to those profiles, Oregon. They passed a law in July of last year that allows us to see behind the curtain. And when we looked at the profiles, a lot of them were inaccurate.
They made wrong guesses about their gender, their age, how many people are in their household, their income, their education level. And it was based off of their shopping patterns or history, or coupled together with other data that that company has bought from, quote-unquote, “data brokers” – companies that traffic in personal information of people.
You know, you say people won’t like it if there are inaccurate inferences. I don’t like if there were accurate inferences. I don’t like people inferring anything about something based on what’s in my shopping cart.
And I guess a lot of folks would wonder, how do I keep that from happening? You just don’t sign up for loyalty programs? You don’t get the discounts everyone else does?
Yeah, so there’s a few different ways you can approach it.
Yeah, you can certainly opt out. That results in you maybe not getting some of those deals. A lot of associates in these stores will key their own loyalty card in for customers who ask for it. So that’s always a nice option for a friendly employee.
Also, you could just choose to shop at places that don’t have these type of programs that have a quote-unquote, “everyday low price.” Or if you really want to shop at a particular retailer that has a loyalty program, you know, maybe giving them sort of like dummy information – you now, a different name…
Spam email account, right? All that kind of stuff.
But that doesn’t track you as closely.
I want to get to what the risks are of a company taking information it’s gathered and then selling it outside the company.
Yeah, the risks are most profound, we found, when it’s sold to data brokers. Data brokers, like I mentioned, are these companies that hoover up all this personal information about you.
It’s called PII: personally identifiable information. Name, address, cell phone number, email address, device that you use for your phone and location off of that… Which is really, really detailed and really scary sometimes to have your movements tracked.
With all of that data, they can create a really interesting sort of scary dossier on who you are and what you do and what your spend money on.
And in some cases, I know this kind of information has ended up in depositions, in court cases, and it’s been used against some people.
Yep, you’re right. For debt collectors, it is valuable and people can very easily chase you down or chase down your family members or employers or things like that.
That’s a little scary. We’ve had so many cases of domestic violence and violence against federal judges or prosecutors. It can be used in damaging ways.
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Derek, this is the second time in a couple of weeks that we’ve been focusing on Kroger. And I think in the interest of transparency, people are wondering, okay, why Kroger?
So the first story was a tip. This was our own digging.
We are very interested in privacy and data collection and how it’s used and how its created. When we got that Oregon shopper profile months and months ago, it really caught our attention in a way that other things that we collect and get from public sources just do not.
And because it took so long for us to get it and because there’s only one place in the country that allows us – anyone, even the customer themselves – to get it, we realized that this is something that’s probably worth showing and digging in.
Is there any way that a customer, if you’re concerned about what a company is doing with your information, that you can request that information and obtain it so you know what’s out there on you?
Yes, a hundred percent. So there are 13 states in the country that have laws in the books where you can access your information from a company, correct it if you want to, or have it opt out or have it deleted.
Derek, you see Texas on that list?
I do see Texas on that list.
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