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Survey: Ask Permission Before Collecting and Using Customer Data

As news of RadioShack’s Chapter 11 filing started to spread in February, a hot-button topic quickly came to the fore: Privacy. Included in the defunct 94-year-old electronics retailer’s bankruptcy auction was the sale of more than 13 million e-mail addresses and 65 million customer names and physical addresses collected over the years by cashiers at RadioShack checkouts across the country.

Consumer outrage ensued.

But as Robert Braun, partner and co-chair of the privacy information management and data protection group at the Jeffer Mangels Butler and Mitchell law firm, pointed out to AdAge, selling customer data as part of bankruptcy assets is very common.

“Information is like any other asset that is owned by a company, and a bankruptcy court has a duty to maximize the recovery of assets by the creditors of a company, so it is going to approve a transaction which in balance it believes is going to the get the best deal for the company,” Braun said. “People are out there ready to buy it because it’s valuable.”

As far as RadioShack’s shoppers are concerned, just because everybody is doing it doesn’t make it right. And according to new research from consulting firm Bain & Company, even monetary compensation won’t cut it.

Bain surveyed more than 900 U.S. consumers and found that 91 percent of respondents don’t want companies selling their data, even if they are reimbursed in exchange. And while the majority of retailers include a disclaimer on their site stating customer data won’t be shared with third parties, about 80 percent of those surveyed are hip to that jive, aware that their data is being used in one way or another and has become a type of “currency” for companies seeking to better attract and retain customers.

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Nonetheless, two-thirds feel it should be illegal for companies to collect or use such data without getting prior consent. In fact, Eric Almquist, a partner in Bain’s Customer Strategy & Marketing and Retail practices, said he was surprised to learn that no matter the demographic characteristic (age, income, education, etc.), “the survey showed little variation in attitudes.”

Instead, opinions varied according to the industry: Nearly 70 percent of respondents want to prevent any type of government or financial institution from sharing their data, while only 43 percent feel the same way about retailers and airlines, likely reflecting longstanding loyalty programs. Opinions on data collected by utilities, search engines and communications providers, meanwhile, was split 50-50.

So what are consumers willing to share? Forty-four percent said it’s fine to share user-contributed social data such as product reviews without their explicit permission. On the other hand, distributing demographic data and purchase behavior without prior consent is a no-no for more than 80 percent, while hardly anyone wants their relationship network or financial or health information shared.

That’s why Rasmus Wegener, founder of Bain’s Advanced Analytics Practice, said if companies want to acquire customer data, they need to ask permission and be upfront about what they plan to use it for. “Open and transparent communication is a good place for any company to start,” he said.