ONLINE MARKETING

Are These Companies Crossing a Line With Customer Data?

They've got loads of valuable info on online consumers--and they got it without asking. Shady tactic, or simply the way of online business?
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Editor's note: This post has been updated to include additional information on Spokeo's FTC violations and a from the company.

With so much data available online, it's no wonder we live in an age of aggressive online marketing. Some might argue you should just get used to this fact and even embrace the change. Your personal information is simply not that personal anymore. Once you have an email address, you have an identity online.

I beg to differ.

I'm all for using customer data in a smart way--but not when it comes at the cost of a company's integrity. Scouring emails and phone logs, for example, crosses a line because consumers have no control over how that information is disseminated (or sold). I'm glad to see Google is willing to take on the federal government when it comes to user privacy.

But there are a number of tech companies out there that are pushing the boundaries of what's acceptable in terms of how they use customers' data. In light of the NSA scandal, it's worth taking a look at them.

Spokeo

One example is Spokeo, a well-known service that knows more about you than you might think. In some ways, it's a marketer's dream come true: Spokeo helps dig up customers' demographic data including their age, where they live, how many kids they have, and their income level. This data lets companies target their marketing plans precisely to those customers who are more likely to buy their product.

There's quite a bit of juicy information, but before you use this approach, be warned. The FTC fined Spokeo last year to the tune of $800,000 for alleged violations of the Fair Credit Reporting Act for collecting personal information and selling it to third parties. You can read more about the violations here. (For the record, a Spokeo spokeswoman contacted Inc.com and said that the company has addressed the violations and is "completely in compliance with FTC standards now.")

I don't remember ever giving Spokeo permission to post about my family. I did give Twitter permission to post my tweets and make them public. To me, there is a difference between me releasing personally identifiable data, and scouring the Web for that info without my knowledge.

Rapleaf

Another edgy company is Rapleaf. The idea is that you can pay the company to find information about users based on their email address. "Rapleaf helps marketers learn more about their customers by attaching demographic data to U.S. consumer email addresses. Essentially, we turn steve@gmail.com into a single guy living in Colorado, in his 20s, who earns 100K a year," spokesman Willie Myers explained to me by email. Rapleaf boasts several big names as customers--eBay, Salesforce, Hallmark, among others--on its website.

Valleywag reported recently that Path allegedly used Rapleaf to acquire information about users as a way to beef up its marketing. (In April, Path--a Facebook challenger--announced it had attained 10 million registered users.) A few years ago, Rapleaf admitted it had scraped Facebook user accounts to gather information. Consumers can go to Rapleaf to opt out of their data collection but probably only the tech-savvy know enough to do that.

Alternatives

Obviously getting your hands on more customer data gives you leverage. Every time you announce a new service, you can contact the people in your database. You can target them for social networking activity. And you can cast a wide net--the more people you have in your database, the higher percentage you'll win over. But this only works if you don't don't alienate customers with your data practices.

Fortunately, there a few slightly less edgy marketing tools you can use that are much more up front about what they do and how they do it. For example, a new Gmail plug-in called Sellingly does let you send out mass emails to potential customers. But in order for you to send a message, the contact has to be legit--there needs to be a record that they have contacted you. You can't just import contacts and start spamming.

Populr is another interesting tool. The service is for sales people who are tired of sending out mass emails and not knowing who is reading them. You can set up a one-page site and send the link to your leads. Then, on the back-end, you can track exactly where that sales lead clicked and even run a report that shows your success with the campaign. The lead is not revealing any personal info--they are just clicking on your site.

What data services are you willing to use, and which ones do you stay away from? Let me know in the comments.

Last updated: Jun 27, 2013

JOHN BRANDON | Columnist

John Brandon is a contributing editor at Inc. magazine covering technology. He writes the Tech Report column for Inc.com.

The opinions expressed here by Inc.com columnists are their own, not those of Inc.com.



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