Telecom Companies Reversal Makes a True “Opt-In” for Your Loyalty Program Even More Crucial

In a striking development for internet privacy, the nation’s four largest telecom companies announced Tuesday that they will stop providing customer location information to companies that aggregate data on their customers.  Aggregators typically work with third-party companies on things like verifying a user’s identity or directing roadside assistance providers. But Verizon, AT&T, Sprint and T-Mobile have promised to start safeguarding customers’ location data.

What does this means for retailers with loyalty programs? Simply put, it re-enforces the accelerating trend toward opt-in-only data sharing. The day is quickly coming when the only way to effectively digitally identify your customers will be through opt-in methods offering compelling and immediate rewards for your customers.

The telecom companies move comes just over a month after Sen. Ron Wyden of Oregon raised the issue in a letter to Federal Communication Commission.  Wyden’s May 8 letter called on wireless carriers to investigate questionable data handling practices by a company called Securus Technologies. The Texas-based company helps prisons monitor inmate phone calls, and Wyden said the company’s technology allowed it to easily track any cell phone. A web portal allowed correctional officers to enter any US phone number and obtain real-time location data on consumers.

Verizon said it found that Securus did “misuse” data gleaned from LocationSmart, one of two data aggregators with which it worked. Verizon said it will terminate its agreements with the two firms, LocationSmart and Zumibo, “as soon as possible.”

Verizon’s decision to choke off data aggregators was applauded by Wyden, who issued a statement: “After my investigation and follow-up reports revealed that middlemen are selling Americans’ location to the highest bidder without their consent, or making it available on insecure web portals, Verizon did the responsible thing and promptly announced it was cutting these companies off.”In a statement to CNNMoney, an AT&T spokesperson said, “Our top priority is to protect our customers’ information, and, to that end, we will be ending our work with aggregators for these services as soon as practical in a way that preserves important, potential lifesaving services like emergency roadside assistance.”

Privacy advocates called the carriers’ decision a small victory, but called for further safeguards on consumer data.   “It’s positive that the carriers have taken steps to halt the sharing of customers’ location information with third party data brokers. But, the Securus revelations shined a powerful light on a major privacy gap that must still be addressed,” Neema Singh Guliani, legislative counsel with the American Civil Liberties Union Washington Legislative Office, said in a statement to CNNMoney.   “The government and companies need to investigate the systemic failures that led to the improper access, provide customers with information regarding how and to whom their information has been shared, and ensure that customer data is not improperly shared with other entities.”