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Ken Magill

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Stupid FTC Watch: As Usual, No Harm, Just 'Risks'

6/3/14
 
By Ken Magill
 
Not only did last week’s Federal Trade Commission report on so-called data brokers fail to list a single instance of actual harm, some of the examples of potential harm revealed an astonishing entitlement mentality.
 
“[W]hile a data broker could infer that a consumer belongs in a data segment for ‘Biker Enthusiasts,’ which would allow a motorcycle dealership to offer the consumer coupons, an insurance company using that same segment might infer that the engages in risky behavior,” the report said. 
 
“Similarly, while data brokers have a data category for ‘Diabetes Interest’ that a manufacturer of sugar-free products could use to offer product discounts, an insurance company could use that same category to classify a consumer as higher risk.”
 
Have any of these people ever held private-sector jobs other than serving lattes in college?
 
The report names two high-risk categories of consumers and says insurance companies may identify them as high-risk.
 
Bang. Bang. Bang.
 
That’s my head thumping on the keyboard.
 
Newflash: Insurance companies can and do use individual screening processes to arrive at those exact same conclusions.
 
I am a 51-year-old diabetic. To no surprise at all, I was recently denied life insurance. I told my wife not to waste the agent’s time. She brought him in anyway. We got the answer I expected.
 
The stunning amount of common sense I just displayed probably disqualifies me from ever getting a job at the FTC.
 
In another life I was a bartender at a biker hangout. I learned through my customers that they lived with one certainty: It was not a question of if they would ever dump their bikes but when.
 
Motorcycle riders and diabetes sufferers are high-risk segments of the population. But the FTC is apparently under the impression that an insurance company identifying them as such and treating them accordingly isn’t a sound business decision that protects their current customers, but somehow unfair.
 
Marketing data helps enable smart business decisions. Smart business decisions can mean certain folks get certain offers while others don’t. Smart business decisions can involve avoiding doing business with certain segments of the population.
 
No one should have to pay sky-high life- or long-term-care insurance premiums because I and a bunch of other diabetes sufferers suddenly force our way into their insurance pool.
 
Insurance companies have every right to charge me more or deny me based on the risk I pose to their other customers.
 
By the FTC’s lights, marketing data is good when it results in sales and discounts, and bad when it helps businesses avoid risk.
 
This is the thinking of people who have never run a business or had to turn a profit.
 
Moreover, marketing data can be used to do good things. It can be used to do bad things.
 
If there is a problem, it’s not the compilers and sellers of data. It’s certain users of that data. The FTC should focus its energy on them.
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