For retailers, the back-to-school shopping season (search) of the late summer and early fall is the biggest boom of the year, second only to Christmas.
As families hit the mall this year during a time not just of war and terror but of rising unemployment and economic uncertainty, they may recall President Bush's plea of two years ago urging Americans to do their patriotic duty by shopping.
What many Americans don't realize is that their enthusiastic consumerism does a lot more for the interests of national security (search) than keeping the economy strong. Long after credit card bills are paid and checking accounts replenished, the information retailers collect about customers in those increasingly intrusive mini-interrogations at the cash register--zip codes, phone numbers, purchases, even point of purchase requests for email addresses and Social Security numbers--remains bouncing around networks of computer databases, permanently traceable and trackable by the government.
I didn't know this when I found myself waiting 25 minutes while a salesclerk rang up the sales of the three people ahead of me. I was just an angry customer wanting to know what was taking so long. When it was finally my turn, and I was asked for everything but my fingerprints and a blood sample to make a $15 purchase, I asked the sales woman why she needed that information. She couldn't answer me. I decided to find out why my favorite stores need to verify who I am and where I live before they'll take my money.
Turns out, I was on to something. Though most of the information stores collect on customers does not seem very sensitive on the surface, privacy watchdogs (search) worry that the relatively benign commercial motivations retailers have for collecting this information could have very dangerous implications in today's political climate where privacy rights seem to be taking a back seat to the cause of tracking terrorists and national security.
"My fear is that as more and more businesses collect this information for business purposes, with what's going on politically, the government will gain access to it," said Charlotte Twight, author of "Dependent on D.C.: The Rise of Federal Control over the Lives of Ordinary Americans" (search) (Palgrave/St. Martin's Press, 2002) and a professor of economics at Boise State University. Twight said that once a record is made, there is no protection from the government gaining access to it. "The information that retailers use to create consumer profiles, the government will use to profile innocent citizens," Twight said.
Privacy advocates like Twight won a major battle last month when John Poindexter (search) resigned from the Pentagon amidst evaporating Congressional support for the Total Information Awareness (search) system, the federal anti-terrorism initiative he was tapped to head. TIA would have established a sort of uber database that would crunch data from just about every database currently in existence and basically provide the government with all the information available on everyone, anywhere.
But despite the recent failure of TIA, the USA PATRIOT Act (search) passed in October 2001 gave the government expanded powers to obtain records of business transactions. Twight said that many people don't realize that sensitive information about their medical and employment records, travel history, financial dealings and educational background--in addition to their purchases-- is buried in accessible computer files.
But even without the privacy issues they raise, many people find the cash register questioning intrusive and annoying. Why do stores need to know so much about you?
Mallory Duncan, president of the National Retail Federation (search), said retailers began collecting phone numbers and zip codes and recording purchases to protect themselves against fraud--the return of stolen merchandise for cash refunds--without having to subject their customers to draconian return policies. Knowing who you are, where you live and what you buy also helps them protect their customers and themselves against identity fraud, save big on marketing and mailing costs by targeting their advertising, pinpoint where to open their next store, and provide a high level of personalized and convenient customer service.
For example, at the high-end kitchenware store William Sonoma, buyers of gift certificates are asked to provide name, address and phone number. If the gift certificate is lost, the store can track the number to verify whether it has been redeemed and if not, issue a new one. Without the ability to track the specific certificate number and verify who purchased it, a lost gift certificate is the same as losing cash. Tracking which zip codes their customers come from lets Bed, Bath & Beyond know where a new giant store is most needed.
Providing this information to a retailer is almost always voluntary and, Duncan added, customers are increasingly providing false information when asked for it. Retailers are obligated by law to report cash transactions over $10,000 to the government, but other than that, much of the information retailers collect is not stored. But, Duncan said, different companies use the information different ways, and the issue of how their marketing efforts dovetail with privacy and homeland security concerns is a relatively new one for the retail industry.
"After Sept. 11, the government went to some companies and asked for help tracking the hijackers," Duncan said. "One would hope the government wouldn't abuse the power the people have chosen to give them."
One sector of the retail industry for whom the issue is not new-- book store owners-- feel the government has already shown a predeliction for abusing that power. For them, the issue dates back before the terrorist attacks to the Monica Lewinsky-Bill Clinton scandal (search), when the government subpeonaed Lewinsky's purchases from several book stores. The stores fought the order and won an early court round before Lewinsky agreed to turn over her book purchase records as part of her immunity deal with prosecutors.
Chris Finan, president of the American Booksellers Foundation For Free Expression (search), said booksellers knew they had a problem when they realized new computerized inventory tracking systems were matching purchases with credit card numbers. Instead of just telling owners how many of a particular book they sold, if it was bought with a credit card, they also knew who bought it.
"It was a suprise to us," Finan said. "When we realized we had this information, we realized we had a privacy problem and have been endeavoring to do something about it ever since." (A law suit against the Justice Department recently failed, but booksellers have been successful in getting legislation introduced that would curb the attendent sections of PATRIOT. The bill has attracted bi-partisan support. )
Consumers do have the right not to provide retailers with information and can make cash purchases that don't leave credit card records behind, and groups like the NRF and ABBFE are providing members with guidelines for privacy policies.
But as Duncan points out, the administration pushing PATRRIOT and similiar policies is one elected, and now enjoying overwhelming support, from the American people. He suggests that the best way Americans can protect their privacy is perhaps at the polls.
"Retailers have no control over what the government does," he said. "These laws have been passed by people who Americans gave that power to," he said.