You probably have three or four of them in your purse or wallet or even attached to your key chain. Called "loyalty cards," "rewards cards," points cards," "swipe cards," "advantage cards" or a variety of other names, they are plastic cards issued to customers with the promise that they will save you money. When you're finished shopping and you check out, you swipe the card and are rewarded with the promised savings. You, the happy shopper, takes a look at the receipt to see just how much you saved.
What you don't realize is that the store that issued the card has made far more money from you than what you just spent - and they violate your privacy in the process. Those cards are a source of huge revenue because each time you use one, the store is collecting information about you that they can sell.
Among their customers for your personal data - health-related or not - are other businesses that want to sell you things or services, or that want to sell or use your information for even bigger things. Some of those reasons are rather benign - from the local car dealer who may be very interested in a list of people who purchase expensive meats, seafood or wine on a regular basis (and therefore probably have lots of disposable income to spend on an expensive car), to your local hospital that wants to know who's buying pain relievers and might be a candidate for surgery.
But then there are those larger corporations that want your information to figure out what your health challenges might be, and therefore, whether you should have to pay more money for health insurance or be denied life or disability insurance.
Here's how loyalty reward cards work:
When you sign up for a loyalty card, you provide your name and address plus (depending on the store) your Social Security number, phone number and email address. Sometimes a store asks if you have others in your household who would also like a card, which may tell them how many people live with you. If the store is a pharmacy or a store with a pharmacy in it, they will ask for your insurance information. Before you save your first penny, they have a treasure trove of information about you.
Now you go shopping. This week you pick up a few over-the-counter drugs, like cough medicine or aspirin, vitamins or antacids. Depending on how quickly you buy them the next time, they'll make an educated guess about how often you have headaches or cramps or catch cold. Maybe you buy a lot of ACE bandages or Band-Aids - which tells them that someone in your house is accident-prone. When you pick up a 12-pack of beer six days a week, that gives them even more information about the likelihood that you are an alcoholic. If you buy your prescription drugs from the same store, that provides a whole new set of data, including who your providers are, what your diagnoses are, what your allergies are, how often you see the doctor and, of course, what drugs you take.
But it doesn't stop there. Suppose you have a real affinity for steak, beer, wine, chips or chocolate. That's being tracked, too, and wouldn't a potential insurer want to know if you eat a diet with too much sugar, salt or fat or drink too much alcohol? Or maybe it's the other way around - maybe you are vegetarian and all you buy are organic vegetables and fruits. If you are a life insurance company, you can learn quite a bit from someone's supermarket purchases.
Many of us realize that the great match-up comes when we check out with our purchases. The swipe of our loyalty reward card says, "Bob Jones just purchased A, B and C." All that data are put together with everything else Bob Jones purchased at that store ever since he acquired his loyalty reward card. Bob Jones just saved a few bucks. But the store just added a gold mine to its database.
What most of us don't realize is that there is another way we are being tracked. Many of those loyalty reward cards contain radio frequency identification (RFID) chips in them. The more sophisticated stores are set up to track us as we travel up and down the aisles. You might never purchase those Tums, but if you stand in front of the antacid counter for any length of time, they'll know you were thinking about it and that will go into your record, too.
There are hundreds of companies that buy this information about individuals or in the aggregate to help them target their marketing or deny certain services like life insurance or disability insurance. It's even possible an auto or homeowners' insurance company could use the data to decide what prices to charge or whether to deny you services. We know they are using credit scores. This is just one more source of data for them.
Since none of these organizations are covered entities under the Health Insurance Portability and Accountability Act (HIPAA) rules, there is no restriction on what those stores that issue loyalty reward cards can do with your information.