I am vehemently opposed to any sort of loyalty cards that are now de rigueur at almost all stores where you make a purchase of any regularity or size. I think a lot of people see them as a harmless way to save a few bucks. And that’s what they are — for now. But they are obviously a foundation on which to build. But build what? Well, the FTC’s deceptive marketing practices lawsuit against CompuCredit is sure suggestive (Silver-Greenberg, Jessica, “Your Lifestyle May Hurt Your Credit,” BusinessWeek, 19 June 2008):
The allegations, in part, focus on CompuCredit’s Aspire Visa, a subprime credit card for risky borrowers. The FTC claims that CompuCredit didn’t properly disclose that it monitored spending and cut credit lines if consumers used their cards at certain places. Among them: tire and retreading shops, massage parlors, bars, billiard halls, and marriage counseling offices. “The company touted that cardholders could use their credit cards anywhere,” says J. Reilly Dolan, assistant director for financial practices at the FTC. “What they didn’t say was that you could be punished for specific kinds of purchases.”
And the more general point:
With competition increasing, databases improving, and technology advancing, companies can include more factors than ever in their models. And industry experts say financial firms increasingly are looking at consumer behavior, as CompuCredit did.
Of course the corporate idiocy here is mind-boggling. First they target a sub-prime demographic, but then cut them off for the very behaviors that made these people sub-prime in the first place. Really? CompuCredit was unaware that the underclass blew their money on scratch tickets and payday loans?
I don’t suspect that this is leading to some insidious world of PreCrime, where government thugs scoop you up, guilty on the basis of a statistical analysis. Rather, nudge style, it will just become the accepted background of people’s expectations. People will recognize an incentive and respond accordingly. “Oh, no, we can’t go out for happy hour. We’re trying to get our credit score up for a home loan.”