Verizon in damage-control mode over privacy, marketing

Verizon Wireless (NYSE:VZ) posted more information on its website about how its Precision Marketing Division will collect and market user data, a move one critic says is a positive step but not enough to fully reassure customers that their privacy is being protected.

The new blog post on the operator's news center is from Torod Neptune, vice president of corporate communications, who is apparently addressing a firestorm of criticism that has erupted since this month's launch of Verizon's program to analyze and sell aggregated customer data to marketers.

"Last year we updated our privacy policy, and we want to share more about what that means to you," wrote Neptune, explaining Verizon is engaged in a number of new efforts to help marketers understand mobile consumers in a more detailed and efficient way.

"None of the data that is used in this program is personally identifiable, and we do not sell raw data to third-parties. We are not selling your personal data," said Neptune, who defended Verizon's efforts to provide information about the program to its customers. "At the time these programs were announced, we informed our customers of the changes through updates to our privacy policy and through emails or direct mail, depending on preferences for how they wanted us to communicate these types of changes with them," he wrote.

Neptune's post seeks to reassure customers, and perhaps legislators and regulators, that the new division's Precision Market Insights program is only providing marketers with aggregated demographic, mobile usage and location data in the form of business and marketing reports. "To be clear about this, we are aggregating customer data that has already been de-identified, which means none of it is personally identifiable information," he said, noting such information can help advertisers determine what ads to place on billboards or at sporting events.

The posted message "is certainly better than what they had initially said about the program, which was cryptic at best," Hanni Fakhoury, a staff attorney at the Electronic Frontier Foundation, told FierceBroadbandWireless. "This very clearly lays out what they are and are not doing. They should have done this from the beginning."

Yet Fakhoury suggested Verizon is offering confusing explanations by first promising the company is not using personally identifiable information and then following that up by saying customer information will be used to cater advertising to individual customers.

Neptune's post refers to the new Verizon division's Precision Marketing program--which provides advertising and advertising support--by noting, "The other program we introduced will help to make ads you see more relevant" based on user demographics. "This program does not use the location of your device or browsing information," he added.

Fakhoury said that while Verizon's marketer-outreach efforts do not appear to violate the federal Wiretap Act--which prohibits the interception, disclosure or use of the contents of any wire, oral or electronic communication through the use of a device--they do violate the spirit of the law. "I think this is a reflection on how the law is not really capturing what is happening," he said.

The Wiretap Act itself appears to give conflicting guidance as well. The law "says you cannot intercept content of communications in real-time," said Fakhoury, but it also states "a carrier can gather proprietary information and use that for other purposes provided it is non-person-identifiable and is aggregated with other information."

While Verizon's aggregation of de-identifiable data may keep it from running afoul of federal wiretap regulations, "the interception still occurs," said Fakhoury. Knowing the websites someone visits and whom they interact with, even on an aggregated basis, provides considerable personal information regarding a person's interests, politics and other personal characteristics.

Such information, he said, is supposed to be off limits unless someone from law enforcement obtains a legal order requiring its release or a company has the consent of the consumer to use it. Neptune's post reiterates Verizon's longstanding message that customers can opt out of the company's data-marketing efforts online or by calling an interactive voice response line.

But remarkably few consumers go to the trouble to read vendors' privacy guidelines and opt out of their marketing programs. "They opt everybody in, assuming most people won't opt out," said Fakhoury.

Ultimately, debates over the use of consumer network-usage data by telecommunications companies may need to be addressed by lawmakers. Fakhoury believes Congress agreed to let carriers use proprietary customer information to provide better service by identifying areas where more cell towers were needed, for example, not to generate additional revenue for the carriers.

"Congress needs to reexamine the law here and think about how proprietary information is being used to funnel Web traffic into advertising revenue," said Fakhoury.

For more:
- see this Verizon blog entry

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