I am re-posting here my original Huffington Post entry.
People sacrifice their privacy for financial gain on a regular basis. This trade-off is the foundation of loyalty cards. Every day, I allow SafeWay to track my purchases, and from time to time I get 70 cents off of a box of Kleenex or something similar.
But exposing private information to the world for no apparent gain is stupid. This was made painfully clear today when social networking site Blippy exposed users credit card numbers in Google search results.
Blippy is a viral marketing engine that relies on exhibitionism. It lets people automatically broadcast their purchases, with the idea that their friends will buy the same things. I’m not sure why people want to expose themselves like this. You see, with Blippy, you’re not promised anything in return for all this free advertising and personal exposure.
Worse yet, people put themselves at risk of identity theft. Giving up some privacy and exposing your behavior to one merchant because you want a specific benefit is one thing. But exposing yourself to the entire world is stupid.
Exploiting stupidity has always been a source of business. In fact, Blippy just announced $11 million in funding from August Capital.
There’s so many great things happening because of the Internet. But because of the Internet, exploiting stupidity is more scalable.
The Daily Show’s Wyatt Cenac examines Bank of America’s hidden credit card fees with a former employee and a mafia loan shark.
On December 10, the Center for Responsible Lending has published a new report entitled “Dodging Reform: As some credit card abuses are outlawed, others proliferate”
It lists a pretty damning list of new fees and new ways of obfuscating them that have been created by banks to keep making money on the backs of consumers while circumventing the impending Credit CARD Act of 2009.
See also WalletPop for a good summary of what these new fees are.
OK, so I have been complaining about a lack of innovation in financial services in a prior post. Actually, I lamented the lack of innovation at the service of customers. It seems that there is plenty of innovation at the disservice of customers.
You have to love the cover illustration provided by Mark Fiore for the CRL report.
Illustration by MarkFiore.com
Credit card issuers have reduced lines of credit by $1Trillion in the past 12 months. At least this is one less credit bubble to worry about. More accurately, I should put my words in a slightly different order: this is one credit bubble to worry less about. There are still plenty of credit card holders in deep trouble.
Things may actually be starting to change at a much deeper level in the minds and habits of the American consumer.
When I started working with payment cards in the US in 1995, I was told in no uncertain terms that people would never “pay before”, which is what prepaid cards are about, when they had the choice to “pay after” which is the convenience offered by credit cards.
According to the Mercator Advisory Group, the “open loop” or “network branded” prepaid cards are expected to grow at a compounded annual growth rate of 48% until 2012. They are the cards with Visa, MasterCard, American Express or Discover logos, that can be used anywhere debit cards are accepted.
Mercator US Prepaid Forecasts To 2012
They will surpass “closed loop” or “merchant branded” prepaid cards, which are mostly the gift cards that you find on j-hooks around every aisle corner of your supermarket.
This means that prepaid cards will literally be everywhere. It is fundamentally a good sign: American consumers will keep spending, but without the debt that comes with credit cards.
But exposing private information to the world for no apparent gain is stupid. This was made painfully clear today when social networking site Blippy exposed users credit card numbers in Google search results.