You May Give Data Away, But One Recipient Pegs its Value in the Millions
Kramer, Jerry's eccentric neighbor on Seinfeld, once asked rhetorically: "Why does RadioShack ask for your phone number when you buy batteries?"
The query drew a knowing laugh on the 90s sitcom. Why does RadioShack want your phone number? But in the 21st century we have an answer for Kramer, and it's not that funny -- at least not to federal regulators. The answer is: Because, years before it became a hot-button topic, RadioShack understood the value of your data.
Now RadioShack is selling off assets amid a bankruptcy proceeding, and -- surprise -- one of its few remaining bits of high-value property is its database of personal information gathered from millions of customers. Standard General, a Wall Street hedge fund, bid $26.2 million for the Radio Shack name and intellectual property, which may include you. Your phone number, address, email and perhaps a record of your RadioShack purchases: HDMI cables, RC toys for the kids, old Flavoradios. Chances are it's all on a server somewhere.
$26.2 million. And you gave it away for free.
The Federal Trade Commission is unimpressed, not least because RadioShack earlier promised not to do this. "Consumers provided personal information to RadioShack with the expectation that RadioShack might use it, for example, to make new offers of interest to consumers, but not to sell or rent it," said Jessica Rich of the FTC's consumer protection bureau. Several state attorneys general are objecting. So is Apple, which sold iPhones and iPads through RadioShack stores.
In negotiations with Standard General, the FTC is trying to secure a pledge that the database won't end up with a company in a different line of business, or that ignores the original RadioShack privacy guidelines. But it's impossible to know where all that personal information will end up. There may be a silver lining to this. Perhaps it will wake more consumers up to the actual value of their private data -- and discourage them from giving it away. If so it will be just in time, because the trickle of data RadioShack captured over the counter in the Seinfeld era is now a digital torrent.
We're a society in conflict. On one hand, there's outrage over regular news of wholesale data breaches. Dozens of privacy advocates have lined up against CISA, the Cybersecurity Information Sharing Act making its way through Congress. A recent public survey from Scoopshot, a U.K. video and photo crowdsourcing service, found 70 percent worried about what social media providers do with their uploaded photos and videos. 90 percent claimed they would stop using a social media platform over such concerns.
Yet many trade their identities away for a pittance or less. Perhaps you are among the many who volunteer intimate medical and financial information answering online surveys for a smidgen of frequent-flyer miles worth pennies. Perhaps you carry a grocery store loyalty card that entitles you to occasional "club prices" on bananas or noodles -- discounts that pale next to the value of the personal and transactional data you donate. Some businesses exploit the widely held view that personal data is worthless by actually charging to join loyalty programs.
Time to wake up to the fact that what an organization knows about you is among its most valuable and marketable assets. The value of a business isn't always tied to profitability; many derive their market value from the sum of property on hand. As RadioShack is proving, a literally bankrupt business can still market its data assets profitably. If you donated your data while buying batteries, you're helping someone else make money.
We ought to stop declaring personal data bankruptcy -- which is effectively what you do when you assign zero value to your information, buying patterns and preferences. Better to be cautious and hard-nosed about entering into data transactions. Drive harder bargains. Who will your data be shared with? How will it be used to shape unique offers and pricing? How is it protected? And -- an especially relevant question now that RadioShack has gone belly up -- what happens to the information if the collector goes belly up?
We tend not to give money to strangers; we should be as reticent with our personal information. You may not believe your phone number and buying habits are worth much. But Standard General, the Wall Street firm picking over the remains of RadioShack, believes they're worth $26.2 million. Hold out for more.