What big companies really know about you

IT'S no secret every time you swipe, click or like something online, a big company knows about it. But how do they use the information? Here's what's happening behind the scenes.

Transaction data can be combined with health records to build up a clear picture of habits.

IF YOU'VE ever shopped online, you'll know the unnerving feeling of a dress or car you once looked at mysteriously following you around the internet for the next few days.

It's just one in a number of ways big companies are tracking your habits, allowing them to provide personalised marketing direct to your eyeballs.

Australian School of Business marketing professor Mark Uncles said it doesn't take a genius to realise everything you do online is being tracked.

"We know in all digital forms, any transactions and usage of online facilities, even if just browsing is all going to be recorded," he said. "I recently upgraded my iPad … I know in principle Apple have access to everything I do on that iPad. It would be naive of me to assume otherwise. Especially with all the public discussion on what these companies know about us. It's not a mystery."

Telstra, for example, collect names, addresses, phone numbers, bank account details and internet protocol (IP) addresses of clients when they sign up to the service.

They also track user behaviour online using cookies. Once a customer visits a certain number of websites they will be assigned a category based on their interests, anything from automotive to banking, retail, life events or travel. This then determines the type of ads they see - the reason those same ads keep appearing no matter what website you're on.

Professor Uncles said you would have to be naive to assume big companies aren't sifting through your transaction records for information.

Professor Uncles said in most cases people hand over their details to incentive programs that allow big companies to use their information - albeit it in non-personalised way.

"They're going along and voluntarily entering into these agreements, maybe with a shrug of the shoulders. If you're really worried you just wouldn't do it," he said.

However information can also be used in ways you might not expect. "Data merging" and "healthinfomatics" are two of the latest trends, where companies overlay different data sets to build up a more detailed picture of consumer habits.

"You take Medicare details and private healthcare details [and] merge the data with people's shopping patterns from Everyday Rewards with their media habits," Professor Uncles said.

This can predict when a person is likely to get sick or what life stage they're at. It's so successful that US retailer Target once inadvertently revealed a 17-year-olds pregnancy to her father before she had a chance to tell him. The retailer was able to pinpoint her due date to within a few weeks based on an analysis of her shopping habits.

Transaction data can be combined with health records to build up a clear picture of habits.

Woolworths is also using this approach. Group head of retail services Penny Winn told a conference last year it combines insurance and shopping data to determine the level of risk a person might have.

"Customers who drink lots of milk and eat lots of red meat are very, very, very good car insurance risks versus those who eat lots of pasta and rice, fills up their petrol at night, and drink spirits," she said.

"What that means is we're able to tailor an insurance offer that targets those really good insurance risk customers and give them a good deal via direct channels instead of above-the-line [advertising]. And it helps to avoid the bad insurance risks."

Credit cards confiscated by police after they were found to be encoded with data stolen during a security breach at US retailer target.

So should we care?

Australians are a privacy conscious bunch, with nearly half believing their biggest risk to privacy comes from online services and social media, according to a survey by the Office of the Australian Information Commissioner (OAIC).

Nearly one quarter felt identity fraud was a major risk while 60 per cent of young Australians were worried about how their personal information was being stored online.

Electronic Frontiers executive officer Jon Lawrence said security is a major risk where big companies are concerned with breaches happening on a "daily basis".

Just prior to Christmas a huge breach occurred at Target, with 110 million customers having their personal information including credit and debit card numbers stolen. It soon surfaced on black markets websites and two people were arrested near the Mexican border with 96 fraudulent cards.

Mary Carmen Garcia, 27, was arrested along with another man with 96 fraudulent cards produced using data from the Target breach.

"The more you collect, the more valuable it becomes and the more likely someone has access to your information," Mr Lawrence said. "If you've got enough information about a person ... you can steal their identity, you can pretend to be the bank and do all sort of things."

Association for data-driven marketing and advertising CEO Jodie Sangster said it's a "constant struggle" to ensure data is stored correctly and companies have a responsibility to tell their customers when a breach has occurred.

"The more sensitive the data the more secure you have to keep it ... It's a constant raising of the bar to put new security measures in place," she said, adding it's essential to gain informed consent to avoid being seen as big brother.

"It really is down to responsible marketing. If it's done right it won't be seen as creepy. But if the company does overstretch the mark, it can take it one step too far so the customer is thinking 'goodness how do they know that about me?"

Tips to keep your privacy online

• Sign up to the Do Not Call Register to ensure you don't receive marketing at home. There is also a Do Not Mail Register.

• When signing up for a new service, check the box that says you do not want to receive marketing material. If you already do get it, look for the link at the bottom to unsubscribe.

• Delete your cookies. These can be used to report back the sites you visit to third parties who will use the information for marketing.

• Check your browser's privacy settings. These can be different depending on the browser and your default level. Choose the one that is right for you.

• Turn off the GPS and wifi on your phone unless you really need it. This will prevent you being tracked inadvertently in retail stores.

• Visit youronlinechoices.com.au for more information relating to privacy online. Or visit the OAIC website for changes to the Privacy Act which come into affect in March.

Do you care about companies using your data for advertising? Continue the conversation on Twitter @newscomauHQ | @Victoria - Craw

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