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Credit card companies may sell consumer purchase data on to advertisers, reports say

Visa Inc. and Mastercard Inc. are working on a system for delivering online behavioural adverts to consumers based on what they buy in shops, according to media reports.26 Oct 2011

The US-based credit card networks have developed "preliminary" plans to place shoppers into groups based on their in-store purchasing history and sell the information to marketing firms that would deliver online behavioural ads, according to report by the Wall Street Journal and report by CNET.

Publishers and advertising networks currently use 'cookies' to track user behaviour on websites in order to target adverts to individuals based on that behaviour. A cookie is a small text file that remembers a user's activity on a site.

Mastercard's proposed system involves anonymously grouping consumers into "segments" based on what they have bought and selling the information on to advertisers, according to the CNET report.

Visa's plans involve dividing consumers into groups based on a number of segments, including purchasing history and location, before selling that data on, the CNET report said.

Visa and Mastercard did not respond to our requests for a comment.

Iain Connor, advertising expert at Pinsent Masons, the law firm behind Out-Law.com, said that if the scheme was ever introduced in the UK credit card network, it would have had to obtain consumers’ explicit and informed consent in order to sell purchasing history data to marketers.

“Under EU and UK data protection laws organisations must process personal data, such as consumers’ names and credit card details, fairly and lawfully and collect it for specified, explicit and legitimate purposes,” Connor said.

“If credit card companies want to share UK customers’ purchasing history details with advertisers they will have to explain that they will collect that data from them and explain how it will be used. This could be done via the company’s terms and conditions but the companies would have to obtain customers’ informed and explicit consent in order to sell that information on to third party advertisers," Connor said.

"Whether Visa and Mastercard’s existing data protection notice and terms and conditions would constitute ‘informed’ consent to that happening or whether new terms and conditions would need to be drawn in order to achieve that level of consent remains to be seen,” he said.

Update 31/10/2011: We received a statement from Visa on its plans, which it said involved allowing banks and retailers to base additional capabilities on the use of anonymised user data.
“A key feature is that consumers and our member banks will have the ability to control engagement levels in these services, but they do not involve personal or private details,” a spokesman said. “Potential example uses of Visa Europe's data and analytics capability are to outline aggregated cardholder purchasing patterns to determine peak shopping times, spending behaviour and optimal retail locations.  Visa Europe already offers these features to its member banks and retailers, but additional capabilities are currently in development.”

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