Banks watch where you spend, then sell that info to retailers

Banks watch where you spend, then sell that info to retailers

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Banks now often turn the data they have on your spending habits into extra revenue by identifying likely customers for retailers. Until very recently, such data has been used mostly for fraud protection.

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If you were to order at Chipotle and pay with a credit card, you might soon find an alert from your bank proposing 10% off lunch at Little Caesars. The bank would earn fees from the pizza place, both for showing the offer and for processing the payment. Wells Fargo began customizing retail offers for individual customers on Nov. 21, joining Chase, Bank of America, PNC, SunTrust and some smaller banks, FOX 5 reports.

Unlike Google or Facebook, which decide what you’re interested in buying based on your searches, web visits or likes, “banks have the secret weapon in that they actually know what we spend money on,” said Silvio Tavares of the CardLinx Association, a trade group whose members help broker purchase-related offers. “It’s a better predictor of what we’re going to spend on.”

“Ten years ago, your bank was like your psychiatrist or your minister — your bank kept secrets,” said Ed Mierzwinski, a consumer advocate at the U.S. Public Interest Research Group. Now, “they think they are the same as a department store or an online merchant.”

The startup Cardlytics, one of the field’s pioneers, runs the offer programs for Wells Fargo, Chase and other banks. Through these partnerships, Cardlytics gets insights on $2.8 trillion worth of annual consumer spending worldwide.

A Cardlytics rival named Augeo runs a similar program with other banks. American Express has an in-house program for its cardholders, and Visa targets offers on Uber’s app for credits toward rides and food delivery.

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“Consumers understand the banks are giving them ways to save money based on how they shop,” said Scott Grimes, CEO and co-founder of Cardlytics.

Many banks don’t seek explicit consent, instead, they include these programs in general agreements for the card or online banking. “It’s totally long, and people don’t read that,” said Saisattha Noomnual, a student in Chicago who gets targeted offers through her Chase and Bank of America cards.

Under federal law, banks have to let you withdraw from marketing — which is difficult to do if you’re not aware that it’s happening.

“Consumers aren’t aware of the subtle nudges apps are giving them to buy, buy, buy,” Mierzwinski said. “They are basically digging deep into your psyche and figuring out how to manipulate you.”

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