Web Coupons Tell Stores More Than You Realize

Hugh Pickens writes "The NY Times reports that a new breed of coupon, printed from the Internet or sent to mobile phones, look standard, but their bar codes can be loaded with a startling amount of data, including identification about the customer, Internet address, Facebook page information, and even the search terms the customer used to find the coupon in the first place. The coupons can, in some cases, be tracked not just to an anonymous shopper but to an identifiable person: a retailer could know that Amy Smith printed a 15-percent-off coupon after searching for appliance discounts at Ebates.com on Friday at 1:30 pm and redeemed it later that afternoon at the store. Using coupons also lets the retailers get around Google hurdles. Google allows its search advertisers to see reports on which keywords are working well as a whole but not on how each person is responding to each slogan. That alarms some privacy advocates. Companies can 'offer you, perhaps, less desirable products than they offer me, or offer you the same product as they offer me but at a higher price,' said Ed Mierzwinski, consumer program director for the United States Public Interest Research Group, which has asked the Federal Trade Commission for tighter rules on online advertising. 'There really have been no rules set up for this ecosystem.'"

Comments

Diff story?

[LostCluster]

What's the difference between this and the grocery store, drug store, or electronics store that wants you to carry a special card to identify yourself in order to get sale prices and discounts? Or the home stuff store that mails you a coupon postcard with your name and address printed on the coupon?

Re:Diff story?

[Anonymous Coward]

The difference is that the store loyalty card gives a fixed rate based on whether or not you pay the fee, and you have to opt-in to be tracked, and the information provided is much less. In theory such a system as this could be tweaked so that everyone ends up paying the maximum amount the store's algorithm thinks they're willing to pay.

Re:Diff story?

[xeoron]

I would also include that the stores don't check the validity of the personal information anyone provides them or not upon filling out the form and handing out the card and by that point if they stores check them, then they don't seem to disable cards with obvious fake names and addresses.

Re:Diff story?

[_Sprocket_]

The subtle difference is that with a loyalty card, we both get (say) 20% a Widget. With this coupon system, you might get 20% but my coupon is only good for 15%.

Also, these coupons seem to be encoding a lot more interesting information in them. With a loyalty card, the store can tell that I bought the Widget. With the coupon, they can tell that I was searching for "personal hobby / interest" when stumbling on the coupon. I then printed the coupon and rushed to make the purchase within 1hr of finding the coupon.

Yeah - store cards suck. But they are much more limited in scope than these coupons. These things make store cards look like the days when folks just walked in off the street and paid for a widget in cash. People are unlikely to be aware of this or understand the implications of it. After all, coupons have traditionally been as anonymous as cash.

Re:Diff story?

[__aasqbs9791]

In most areas of the world people barter all the time. No two people pay the same amount automatically. Why should a store offer everyone the same price? If you don't like, go someplace else. People will share information online, thus it isn't a secret that you got a better deal than I did, I still fail to see a problem here.

And who cares what terms I was searching for when I found this coupon? Stores have a valid reason for wanting that information. Sometimes picking the best terms for ads and such is really hard. If you find out your customers typically find it by looking for terms you didn't think were all that useful, then it means you were wrong and you should redirect your advertising efforts. In some cases I suppose some embarrassing information might leak through (for some items) but come on, it has to be an edge case most of the time.

Re:Diff story?

[profplump]

With this coupon system, you might get 20% but my coupon is only good for 15%.

That's true of your loyalty-card system too, at least if and when they choose to do so. I'm not sure about grocery stores, but I know airlines and hotels and credit cards offer different perks to different customers in their rewards programs.

Frankly I'm not sure why anyone sees this as a problem. Maybe I'm just dense, but I'm not understanding the net benefit to society of having fixed prices vs. negotiated prices. For the largest purchases most consumers make -- a house and a car -- the price is almost always negotiated. What's special about shoes that requires we sell them at the same price to everyone? If it's so important to keep prices the same, shouldn't we be worried about prices that different among stores in the same city? In the same state?

Re:Diff story?

[thetoadwarrior]

Loyalty cards generally have terms and conditions with them explaining what you're getting into (or should) where as finding random coupons to print out on the net probably doesn't. Sure most no one reads the loyalty card's T&C but at least they're given the option.

Re:Diff story?

[misexistentialist]

Loyalty cards can also offer cumulative rewards or special targeted offers that print out at the register. I think coupons including more personal info is mainly intended to prevent counterfeiting.

Re:Diff story?

[Anonymous Coward]

In italy a law exists that require merchants to expose the price of items to be sold and make that exposed price final, even if was put up by mistake with a digit less, then good for you and no recourse for the seller. This has been done as a lot of people try to extort a hogher price from tourist to the detriment of the economy at large.

Not that it works, just try to get a cappuccino at rome and compare how much you paid to how much italians pay for it.

Obviously the concept of haggling is not illegal per se, but there are certain services that require having the price fixed first. How can you answer to the waiter asking for a stellar price after you consumed your coffee?

Re:Diff story?

[Paracelcus]

In Firefox, goto tools, options, privacy and select "Automatically start Firefox in a private browsing session", this way your online coupon will not contain any extraneous information. Also remember that the coupon provider will only know what information you provide (you don't have to tell the truth).

Re:Diff story?

[Jah-Wren Ryel]

I would also include that the stores don't check the validity of the personal information anyone provides them or not upon filling out the form

That's not true in every case, some grocery stores do ask to see a driver's license - some also only mail the card out rather than give it to you in the store, so they at least get an address. Plus even when they don't do any of that, just as soon as you use the card in conjunction with a credit card, they've got your name. Use it conjunction with a check and they've got name and address.

Re:Diff story?

[bl8n8r]

> And who cares what terms I was searching for when I found this coupon? Stores have a valid reason for wanting that information.

Oh really? And that valid reason is?? What it comes down to is stores want to stock more of what they know people will buy and adjust their pricepoint based on an individual basis. Also, if the store can track your purchase habits, then they can track your return habits as well. In the end, you may just end up paying a premium for items in a store because you are more likely to bring that item back if you have trouble with it. You may even end up with a custom-tailored warranty on things you buy as well. As far as groceries go, imagine you buy the same 10 items every week. With a per-person tracking system, the store can raise the price of those things when you buy them, but offer the same item to a lesser price to the rest of the public. Bartering? are you seriously going to stand in a grocery checkout line and haggle the price of your potatoes with the clerk?

Re:Diff story?

[Rasperin]

And you know what would happen? People would still by crap, they would get slapped on the wrist for a couple hundred thousand of dollars while being able to push there margin millions of dollars, and they would just find another way to do it or just keep going the same way.

Just like the "real world"

[innocent_white_lamb]

Companies can 'offer you, perhaps, less desirable products than they offer me, or offer you the same product as they offer me but at a higher price,
 
So? I can do the same thing if you come into my store. "50% off, today only." But only for you, not the guy behind you.

Re:Just like the "real world"

[davester666]

That's fine but I know the guy behind me. He's a total dick.

Re:Just like the "real world"

[John3]

We do this with our customer loyalty program at our hardware store. Different customers get different offers. If you spend often but only with coupons and are generating lower profit then we'll send you a $5 of $30 offer. Someone who is very profitable when they come in will get a $5 off $25 or maybe $10 off $40 if they are a very good customer (profit wise). If someone is very low profit and a PITA (pain in the arm) then we will flag them and not mail them any coupons. The coupons have bar codes so we track redemptions, basket size, lifetime customer value, and other metrics.

Re:Just like the "real world"

[Naturalis Philosopho]

A little bit off topic here, but do you ever worry that by pigeon-hole'ing people like that you may be inadvertently creating certain behavior in your customers? If you see the PITA come in, and treat him like a PITA, then he'll always act like a PITA. And the person with a historically small basket and lots of questions may go somewhere else when they grow up, buy a house, and and start making larger and larger purchases for home projects; and they won't think of you 'cause you treated him as a 'low value' customer until then. I know that White Plains is a big market, but can you really afford to run a one-shop-hardware-store on metrics like that? Do people really care that little about service?

Re:Just like the "real world"

[John3]

Yes, it's definitely something we are careful about. We added the loyalty program in 2004 but we always had certain customers that we thought were PITA's based on their habits (in with sale flyers, complaining about prices, seemed to return items more frequently). Once we actually were tracking our customers then I was able to look at their shopping pattern over a two or three year period. Some were actually very good customers and just "high maintenance". They shopped with coupons, but they also shopped without and generated decent gross margin (35% is OK, 40% or higher is quite good). I made a point of alerting my staff about some of these customers that we assumed were "bad customers".

But others were regular abusers of the program. They would buy the $25 minimum to redeem a coupon, then return most of the items a week or two later. Over a two year period they averaged less than 20% margin, some even approaching negative margin (and gross margin is only calculated on the goods and not the cost of labor, lights, rent, etc.). So these customers were truly costing me money with every trip.

I'd say we have only about thirty of these customers in a database of 25,000 so it's a tiny percentage. They are just highly noticeable since they are high maintenance.

Also, it's pretty difficult for them to tell that they are "low value" since they don't know about the offer they never received. They still get the basic reward ($10 for every $250 spent) but they just don't get some of the special offers.

Re:Just like the "real world"

[Hognoxious]

That's fine but I know the guy behind me. He's a total dick.

You think he's bad? You should see the guy in front of me.

Ruin it

[blai]

Exchange coupons with others.

Market segmentation

[b4dc0d3r]

Market segmentation has always been around - you sell things at Bed Bath and Beyond (just as an example) for outrageous prices, but also mail 20% off coupons in several different mailings. Different people get different advertising packages, and it's already based on your purchases since mail-order places tend to share mailing lists as an extra revenue stream.

So it's the new old thing again. Different prices to different people is exactly how the market works today - you buy something for full price, or wait until it's on sale, or wait until you have a coupon, or wait until it's on clearance. You choose the price by choosing when/how to buy.

I'd like to point out that there's no difference between this model and ordering online - online they have your name and IP address and the link you clicked to get to their store along with google keywords if you clicked from google. All this does is expand the same idea into physical stores like fast food that otherwise would be anonymous. If you pay cash, which since more and more places are starting to accept debit/credit cards means you're already giving them more information. And of course the card processing fees increase the cost of providing the service, increasing your food costs indirectly.

So yeah nothing new here.

Barcode Anonymizer

[shogun]

I can a niche for a new website, a barcode anonymizer.

Feed it in the barcode, it decodes it, strips any identifying information and spits out a new valid barcode.

Of course your mileage may vary if the existence of whatever is used to track is part of the validation....

Re:Barcode Anonymizer

[Zerth]

Not likely to work, unless these guys are complete idiots and developed their system from scratch. Which isn't out of possibility, but coupon systems have been kind of a commodity service since the turn of the millenium.

Most coupon barcodes don't encode the relevant data anymore, they just encode a key or two to records in a DB somewhere. It use to be that things like price and quantity were encoded directly; but, just like your suggestion, it was too easy to modify a 20 cent off a can of soup coupon into a 20 dollar off a case of beer coupon. /did work on barcoding systems, still has a bunch of UCC manuals

Re:Barcode Anonymizer

[Anonymous Coward]

How big are these bar codes? Hint: they don't contain any of that information. They just contain a number that refers back to a database. Mess up the barcode and the coupon doesn't scan. Maybe the manager will override that and give you the discount anyway, maybe they won't.

But there is just no way for the coupon itself to contain the data. It's just a key to a database.

Re:Barcode Anonymizer

[Valen0]

This is a nice idea but it is too easy to circumvent. To circumvent this idea, you need to generate a globally unique identification number for each coupon. That globally unique number would reference an entry in the master customer database that would contain redemption status and the other biographical information that is being tracked. You do not need to have all the data on each coupon. All you need is a unique identifier (i.e. the globally unique number) to link the coupon with the other database data.

No free lunch

[fermion]

While it is technically interesting that they can do this in coupons, and it is bad that consumers are too often not told what is being communicated, the reality is that this is not shocking at all. Like affinity cards, coupons on the internet are an exchange for information that can be monetized. Perhaps affinity are slightly more honest, but the concept is the same. The consumer chooses to buy at one location or one brand over another because they will receive a discount. Perhaps the discount make them feel special, or allows them to buy in a location or brand they could not normally afford. In many cases there an alternative that is a comparable price without the discount. The choice is made.

Making coupons more honest is not likely to reduce the flow of information. That requires convincing people that privacy is worth more than a bag of potato chips. One thing that Walmart did that was probably good is give people an realistic option to the overpriced brands they were brain washed in to buying during the 60's, 70's and 80's. Paying twice as much for laundry detergent, even when one could not afford it, was not sustainable. Sure, you got your stories on TV during the day, but was it worth it? Marketing is getting more direct because people still want brands, but they are not willing to pay for them.

So don't use coupons

[noidentity]

I too am worried about my privacy, so I avoid coupons. In fact, I avoid buying anything myself. I anonymously hire people to buy everything for me, including groceries. They always pay cash, and wear different clothing each time. And if they ever get an odd look from the cashier or other suspect behavior, I have instructed them to immediately exit the store without purchasing anything. So far, I have maximum privacy. Another thing, I always make sure to post as anonymous coward.

Re:So don't use coupons

[Bloopie]

They always pay cash, and wear different clothing each time.

Wait a second. You mean . . . they wear different clothing on different days? Man, that is totally hardcore!

New? No.

[Bob9113]

new breed of coupon, printed from the Internet or sent to mobile phones, look standard, but their bar codes can be loaded with a startling amount of data, including identification about the customer, Internet address, Facebook page information, and even the search terms the customer used to find the coupon in the first place.

New? Really?

I just got out of advertising (hopefully for the last time) after a total of 6 of the past 11 years spent cutting tracking code.

The first time I wrote code to track brick and mortar coupons to the individual online origin was in 1999. Every online coupon you print has been doing this for many years. Every high tech advertising company in the business makes its pitch in part by having (or at least claiming to have) the most accurate and precise tracking. If you can think of a way that, theoretically, they might be tracking you; they almost certainly are. It is a massive portion of the value proposition behind advertising; learning which advertising works so you can maximize campaign efficiency. The companies that don't do this, and do it well, go out of business quickly.

The most surprising bit here is that the NY Times is just finding out. Perhaps they have their own in-house ad company? Or they don't run coupons online?

All that said, I'm happy to see this get some publicity. It stuns me how much people think they're not being watched on every single page they visit.

not a big deal

[a2wflc]

Companies can 'offer you, perhaps, less desirable products than they offer me, or offer you the same product as they offer me but at a higher price,'

I have a friend who I've had many contract jobs with (we bring each other along when we get a new job). He gets more money every time because he negotiates better. He also gets MUCH better deals than me on TVs, washing machines, couches, and on and on.

I can be pissed off about it, or learn to do what he does, or be happy with my life. The fact is that different people get different deals.

I work at an Internet Advertising Company

[Anonymous Coward]

I work as a sysadmin for an Internet Advertising Company, and let me just tell you quite simply and without elaborating that what this article is getting all up in arms about? It's not the half of it.

But I just keep the servers working and don't make tactical decisions, so I sleep OK at night.

Wrong, how barcodes really work.

[BitZtream]

Standard barcodes hold suprisingly little info. 5-20 digits. Thats its.

That information (generally) represents a unique ID, if the rules are followed, which will not collide with any other companies.

This number can be unique per product or per item, or whatever the company that owns the prefix wants.

Thats it.

No times. No email. Nothing else.

What happens, is when you use one of these special coupons is that its linked to a entry in a database that knows all about you.

The point to this is ... by the time you print the coupon, you've already given them all the information (how do you think they could 'print it in the coupon' anyway.

The only value this provides is a confirmation that you used the coupon you printed. Nothing else.

If you're using one of those retarded little 'discount' cards, you've already given them enough info to confirm it even without unique IDs on the coupons.

So that brings up the real question, if you're worried about being tracked, why are you doing things that intentionally make you trackable? Why are you creating accounts on websites and then telling them what you like to buy (by using the coupons). Why are you getting the little rewards cards?

A biggest question is ... WHY THE FUCK DO YOU CARE?

Seriously, little hint guys, no one really cares that much about what you do, they just want to sell you more shit, stop being such irrational fear mongers when it comes to privacy. You'll get much further if you pick your battles rather than ranting on about something every time you realize whats been going on for 100 years.

Re:Wrong, how barcodes really work.

[noidentity]

The GS1 Databar codes I've seen in the past year or two appear to hold quite a bit more info. That little strip between the right-hand two barcodes seems to hold around 384 bits of information.

RIP "ecosystem"

[a4r6]

a word we knew and loved, which had something to do with ecology.

Every consumer has to realize:

[Arancaytar]

No advertiser will give you stuff for free. Your discount is paid for with your personal data.

What is in fact despicable, though, is when you are not told exactly what this data is going to be. There is nothing wrong with selling your email address (hell, I'd sell my own by the bucket-load if I got something for them; I have good filtering anyway), but you deserve to know in advance what it is you are selling. It's your right as a seller.

No kidding

[trevdak]

I am the lead engineer for one of the largest providers for mobile coupon systems in the country. My company is known for havng the most robust and flexible couponing system out there.
This story is sensationalist as heck.
Of COURSE there's a lot of information in those coupons. Each one is unique. Therefore, each one can be tracked back to the user who received it. We have access to any information they've sent in (most common is name, age, and zip code, in addition to their phone and carrier, and their phone model if they went through a mobile website). What we don't do is sell data or phone numbers. Nor do we do reverse lookups or spamming. Stores can save any information they want about their users, such as what they've bought, or their number of 'loyalty points' and stuff like that. A SOAP request can pull down that information to their cash registers, and the cashier can update and add new information.
It's very similar to when the cashiers ask you for your phone number. The difference is that with coupons or rewards systems, people have an incentive to actually provide the info.