Abusers of Consumer Data Will Be Punished

Full disclosure: I was the founding CTO of I-Behavior, which is a cooperative database made of 190 million individuals with over 10 billion SKU-level transaction data, sourced from more than 2,400 contributing members. Armed with powerful predictive engines, it has served countless marketers in their prospecting efforts. Simply, the database was designed to find prospects who look just like the participating member’s customers, but aren’t their customers yet. But it all came to an abrupt end: they are permanently shutting down as of September 2022. Unfortunate Demise of a Good Database When the founding CEO Lynn Wunderman and I started the company in November 1999, it was the first SKU level co-op database in the market, forever raising the price of entry for the entire list industry. The physical database moved around on various technology platforms since then, but the basic structure that I designed has been mostly intact. One can say it had a good run; not many databases last that long, especially when SKU level transaction data from thousands of sources float into it. After the founding members (including Lynn and me) left the company at the end of 2005, it was later acquired by WPP in November 2010 and has been under their umbrella for past 12 years. Personalization and Privacy Can Live Under One Roof Apparently, the holding company decided to close it down after agreeing to pay $42 million to resolve a lawsuit by the Department of Justice in 2021. The lawsuit was about the fact that they sold personal information to perpetrators of elder fraud. You know it is a big deal when the DOJ is involved. And $42 million is a hefty sum of money by any standard. I heard that their competitor paid roughly three times more for a similar settlement. Scary, isn’t it? As we were writing the business plan late 1999 through early 2000, I was worried that one great force that can close down the whole business was the government. And in the end, that was exactly how it went down. Nonetheless, I must blame the management in charge who let their valuable data assets flow into hands of questionable marketers with bad intentions. Greed certainly prevailed all around. Knowing the power of data in our custody, Lynn and I were extremely cautious not to offend any consumer. We always examined the marketing materials of potential co-op members, and denied many of them. At times, such issues went all the way up to the board level. I remember one of the men's magazines was rejected by the board, and I thought that we were being too rigid at times. But only if such practice continued. When a company handles data originated from humans—personally identifiable information, purchase history, demographic data, sentiment data, etc.—one cannot be overly cautious. Marketers must do everything they can to prevent grievances from the recipients of targeted messages, always questioning "Would I mind if someone else does something similar with data about me?". Maybe this type of unfortunate demise is inevitable, when every company is supposed to do better than the previous year. In such an environment, no one can really be happy; a CEO cannot miss the target for two consecutive quarters without being fired, employees may be laid off at any moment in the name of downsizing, and customers end up settling for subpar services and products as a result. Who wins really? Maybe it is an illusion that perpetual growth comes without a heavy price for all. In that kind of vicious cycle, important values often get buried and ignored in the pursuit of fictitious sales goals and endless increase in profit. Don’t Do It Just Because You Can It is sad to see the demise of my dearest brain child this way, as from my point of view, it could have been completely avoided. In 2015, I wrote "Don't do it just because you can." In it, I even made a specific example of predatory targeting towards elderly citizens. I can honestly say "I told you so." So, what can we learn from all this? The first lesson is that customers are much more informed now, and they will not tolerate any abuse of data originated from them—that might include personally identifiable information, or seemingly anonymous data. Consumers will get angry when the lines–that they set—are crossed. And they will call upon politicians, who will be happy to oblige requests from their voters. In the end, when the government goes after data brokers for participating in fraudulent campaigns, who would cheer for the perpetrators? Absolutely no one. At the end of my 2015 article, I shared “Consumer Bill of Rights for Online Engagement” by Lester Wunderman, who was “The Father of Direct Marketing” and the first chairman of I-Behavior. He preemptively wrote it at the dawn of online marketing (in 1999, an ancient time in digital age), but modern marketers must abide by every word in it. If not for altruistic reasons, but for their own survival. Greedy abusers of consumer data will be shut down by the government.

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Abusers of Consumer Data Will Be Punished

Customers won't tolerate even a hint of privacy violation

Unfortunate Demise of a Good Database

Stephen H. Yu

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Unfortunate Demise of a Good Database

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Stephen H. Yu