Does your insurance company scan your grocery store receipts?

Quite possibly.

This past Friday, June 15, from Dallas bookofjoe correspondent Chris Kling came the following email:

Joe,

Two fears held by most Americans, i.e., (1) there a great computer in the sky and (2) retailers share the information from use of their loyalty cards, have been confirmed.

See "The Dark Side of Customer Analytics" by Davenport and Harris in the May 2007 edition of the Harvard Business Review.

The case study in the article is an insurance company purchasing loyalty card data from a grocery store chain to use in making actuarial predictions and undoubtedly to set premiums.

When the public finds out that their purchasing pattern data is being sold and how it is being used loyalty card usage will evaporate.

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Well, Chris, it will if word gets out but if the deafening MSM silence on the subject — at least, as this post goes to press — continues, that may never happen.

I do what I can, nonetheless.

Here's the abstract of the article.

The Dark Side of Customer Analytics

Health insurer IFA and grocery chain ShopSense have formed an intriguing partnership, but it threatens to test customers' tolerance for sharing personal information. For years, IFA's regional manager for West Coast operations, Laura Brickman, had been championing the use of customer analytics — drawing conclusions about consumer behaviors based on patterns found in collected data. She came away from a meeting with the grocer's analytics chief, Steve Worthington, convinced that ShopSense's customer loyalty card data could be meaningful. In a pilot test, Laura bought ten years' worth of data from the grocer and found some compelling correlations between purchases of unhealthy products and medical claims. Now she has to sell her company's senior team on buying more information. Her bosses have some concerns, however. If IFA came up with proprietary health findings, would the company have to share what it learned? Meanwhile, Steve is busy trying to work out details of the sale with executives at ShopSense. Many have expressed support, but COO Alan Atkins isn't so sure: If customers found out that the store was selling their data, they might stop using their cards, and the company would lose access to vital information. Though CEO Donna Greer agrees, she knows that if things go well, it could mean easy money. How can the two companies use the customer data responsibly?

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I stopped using my Valued Shopper card and its ilk many years ago for precisely this reason, but when I try to explain why people always say, "You're just paranoid."

"Even a paranoid can have enemies."
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Note added at 1:29 p.m. the day of this post, from Mike Harney's comment on it:

"Commenting on this fictional case study in R0705A and R0705Z are George L. Jones, the CEO of Borders Group; Katherine N. Lemon, an associate professor of marketing at Boston College; David Norton, the senior vice president of relationship marketing for Harrah's Entertainment; and Michael B. McCallister, the president and CEO of Humana."

Did you miss the word "fictional" in this paragraph of the abstract? I'm not suggesting that such smarmy data sharing couldn't happen or won't ever happen, but neither should it be suggested that this case did happen. It's a "What if...?" scenario.

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Good pickup, Mike.