Information Technology Reference
In-Depth Information
not because of Dr. Knowitall's right to privacy but because of his right to expect the
agreementtobeupheld.
What rules should govern the sharing of information collected by organizations
selling products or services? Two fundamentally different policies are called opt-in and
opt-out.
The
opt-in
policy requires the consumer to explicitly give permission for the organi-
zation to share the information with another organization. Opt-in policies are preferred
by privacy advocates.
The
opt-out
policy requires the consumer to explicitly forbid an organization from
sharing information with other organizations. Direct marketing associations prefer the
opt-out policy because opt-in is a barrier for new businesses. New businesses do not have
the resources to go out and collect all the information they need to target their mailings
to the correct individuals. In an opt-out environment, most people will not go through
the effort required to actually remove themselves from mailing lists. Hence it is easier
for new businesses to get access to the mailing lists they need to succeed [51]. Another
argument for opt-out is that companies have the right to control information about the
transactions they have made. Information is a valuable commodity. An opt-in policy
takes this commodity away from companies.
At this time opt-out policies are far more common than opt-in policies. Information
about customers has
itself
become a commodity. Organizations sell or exchange infor-
mation with other organizations (Figure 5.4). This is a common way for organizations
to gather large databases of information they can mine.
For example, a company selling time-share condominiums purchases from a hotel
chain the names and addresses of people who have vacationed in a resort area in the past
two years. From another organization it purchases a database that gives the approximate
annual household income of a family, based on that family's nine-digit ZIP code. Com-
bining these lists allows the time-share agency to target people most likely to have both
the interest and the financial resources to purchase a share of a vacation condominium.
It uses direct mail to send brochures to these people.
Data mining is put to a wide variety of uses in modern society. Here are a few examples.
CREDIT REPORTS
Credit reports are a great example of how information about customers has itself become
a commodity. A credit bureau is a company that keeps track of an individual's assets,
debts, and history of paying bills and repaying loans, using this information to deter-
mine the creditworthiness of that person. Credit bureaus sell credit reports to banks,
credit card companies, and other potential lenders.
Thanks to the national credit bureau system, you can get a credit card from a bank
or store that you've never done business with. When you want to borrow money to
purchase a home, you don't have to go to your local bank. You can get the money from
a bank across the country that trusts you to repay the loan because of your high credit
