How a Simple Coupon Can Lead to Your Worst Nightmare

Suppose a new Pizza Palace opens in your neighborhood. They want your business, and you receive a coupon addressed to " Occupant " for a large "That's Amore" pizza with three toppings for only $10.99. It's such an appetizing deal that you pick up the phone and place an order. Gotcha! Before the clerk utters a word, your name and phone number are trapped in the Pizza Palace caller ID system. What's the first thing they ask? Name and phone number, please . At this point Pizza Palace already knows this information, but they're qualifying you, checking you out! They don't want their delivery people going on any wild goose chases, or worse , getting mugged or ripped off. In other words, they're qualifying you to protect themselves , which is understandable.

Figure 4.1: Pizza coupons

What's the next thing they ask? Address, apartment number, and security code, please. The clerk is no slouch when it comes to typing. It's the main qualification that earned him the job. He inputs your information into their computer database. This will save time the next time you order because you're only a mouse-click away, a convenience for both Pizza Palace and you. At this stage in the transaction you finally place the order, charge it to your credit card, and if all goes well, a piping hot "That's Amore" pizza arrives at your front door half an hour later.

When the Moon Hits Your I.D. Like a Big Pizza Pie

Chew on this! You just sacrificed your privacy to get a pizza delivered for $3 off. Your metamorphosis from anonymous occupant to identifiable customer took less than a minute and was entirely subconscious . And you provided much more than your name, phone number, address, and credit card info . Your order reveals a lot about you. Are you a vegetarian or do you eat meat? Is your fridge stocked with drinks or did you go for a two-liter Pepsi? Do you live alone? Have a family? How many pizzas did you order? Do you have a sweet tooth? You ordered a "Frozone Calzone" for dessert, didn't you? An air-brushed coupon triggered a Pavlovian response that prompted you to pick up the phone and provide private information to a perfect stranger.

I told you, you're a Manchurian candidate! Your personal information is being harvested without you even knowing it. You're being profiled and targeted ! That's why you received the "Occupant" coupon in the first place. Everything there is to know about you already exists on that supercomputer I told you about, and each time you add to your trail of digital breadcrumbs , the supercomputer processes and updates your profile. Pizza Palace sells the information it gathers about you back to the company that sold it your mailing address! That's the way the information business works.

Today, an innocuous coupon is a high-tech marketing gimmick designed to trick people into exchanging personal information for a negligible benefit. Coupons and their cousin, chain-store discount cards, track what products and brands people buy, where and when they shop, and how much they spend . Marketers use this information to profile each customer's personality and buying patterns. They then target that individual with personalized advertising and sell the profiles to other companies, who in turn do the same thing, over and over again. The information industry is playing Three-Card Monte with our privacy!

Low-Tech Convergence

The implementation of convergence is a relatively recent phenomenon , and the evolution is ongoing. Low-tech intrusions, like the pizza coupon, pose a more insidious threat to our privacy than the high-tech variety because we were taught to trust low technology. Not long ago I got a telemarketing phone call that illustrates this.

I had just bit the bullet and gone broadband. Cable modem, digital cable ”"The Works!" as Adelphia, my scandal-ridden cable company, calls it. Five minutes after saying goodbye to the cable installer, my phone rang.

Weber: Hello?
Telemarketer: Mr. Weber, this is Wally Loman from Adelphia Communications. Pardon the intrusion, but I'm calling to see how the installation went.
Weber: Fine, thanks.
Loman: Mr. Weber, do you happen to have a pencil handy?

Harry Houdini called this technique " misdirection ."

Weber : For what?
Loman: You might want to jot down my employee I.D. number. It's badge 07295-B, as in boy.

Figure 4.2: Adelphia homepage
Weber (impatient): Would you mind telling me what this call is in reference to?
Loman: Our partner, TV Guide, wants to send you eight free editions of its digital cable guide at no cost or obligation. We want you to experience the full spectrum of benefits digital cable offers. It's our gift to you. Are you interested?

I usually don't engage telemarketers , but this guy was so slick I went along with him.

Weber: Sure. What do I have to lose?
Loman: Mr. Weber, without your objection I'd like to record the remainder of this conversation for record-keeping purposes. In a moment, Ms. Finkle, my sales associate, will join us on the line. That's spelled F-I-N-K-L-E.

The short hairs on my neck rose.

Weber: I don't give a damn how you spell Finkle! Stop. I object!
Loman (persistent): What do you object to, sir?
Weber: I object to having my conversation recorded, and I object to you turning a sales pitch into a mock legal deposition! You and I both know every word you just uttered was scripted.
Loman: It isn't necessary to record the conversation if it makes you uncomfortable, Mr. Weber.
Weber: Listen! I want my name removed from all mailing and phone lists. I'm opting out! Do you understand me?
Loman: Yes sir. I'll put you on our "don't call" list right away. Sorry to bother you, Mr. Weber. Have a nice day.

This is a scary conversation when you break it down. What prompted my phone to ring in the first place? Convergence! The same Adelphia computer that activated my digital cable notified another computer in some remote telemarketing boiler room to put me in their sales queue. TV Guide paid Adelphia for my account information. Odds are if I had swallowed the bait, I wouldn't have canceled after eight issues, and TV Guide would have a new subscriber. I didn't bite. The question remains, what will the telemarketing company do with my personal information? Around and around it goes, where it stops nobody knows. Once information is out there, it's out there in perpetuity!

I call Wally Loman the "Telemarketer from Hell" because he was such a slick professional. He's a "closer." Had I consented to have the conversation recorded ” an outrageous sales ploy and an invasion of privacy by any standard ” Ms. Finkle, an "order taker," would have wrapped up the loose ends, liberating Wally to charm the next prospect.

It's no accident that Wally did a complete 180 the minute I asked to be removed from the list. It's the law. In 1991, President Bush signed the Telephone Consumer Protection Act (TCPA). Public Law 102-243 (1991) amended Title II of the Communications Act of 1934 by adding a new section, 47 U.S.C. Section 227, enacted by Congress to "reduce the nuisance and invasion of privacy caused by telemarketing and prerecorded calls."

If you tell a telemarketer to take your name off their list, that organization is required by Federal law to put your number on their "don't call" list and keep it in their database for ten years .

Figure 4.3: Telephone Consumer Protection Act Section 227

Listless

Unfortunately, opting out doesn't always work. It simply puts you on another list ”a company's "don't call" list. The problem is you're already on hundreds of lists! The word "list" in this context is a throwback to the sixties, when the number of people a marketer could contact was so small that the names could be kept on a sheet of paper. Today marketing companies have huge databases containing every bit of information ever collected on an individual. That database is available to authorized users such as subscribers, as well as unauthorized users such as hackers! Because every phone number in the world can now be stored on a PC's hard drive, and most can be purchased inexpensively on CD-ROM, your best option is to have your name marked as a "don't call."

A decade ago, software came on floppy disks; computer viruses, spam, and Internet fraud were unheard of; and private information was relatively secure. The good old days are gone! Today, conglomerates like Microsoft and AOL package entertainment and technology designed to hijack our privacy by entwining our lifestyles, properties, and finances. They want to be one-stop shops . If Bill Gates has his way, one day Microsoft will be your bank (.NET Passport Wallet/Palladium), travel agent (Expedia), phone company (bCentral Wireless), ISP (MSN), news channel (MSNBC), real estate broker (MSN House & Home), and car salesman (MSN Autos).

Xbox ”The Name of the Game Microsoft is Playing

Bill Gates is the P.T Barnum of convergence! The question is, can an all-encompassing conglomerate like Microsoft compartmentalize personal information gathered from a cornucopia of sources and be trusted not to commingle it and abuse our privacy? Let's look at one Microsoft product spawned by convergence.

The very name Xbox reeks of convergence. Xbox is a gaming console that consists of a hard drive, a CD-ROM, an NVIDIA 3D graphics controller, RAM, a modem, and an Intel CPU. In other words, Xbox is a personal computer equipped with an operating system that plays games . Hackers have already managed to turn Xboxes into Linux computers, but that's beside the point. It was predictable! By the time you read this, I'm sure there will be Wintel hacks as well.

Microsoft is burning cash on Xbox! It doesn't take an MBA from Harvard to tell you that will happen when you sell a souped-up computer for $199. Most analysts estimate that Microsoft lost $125 to $150 per Xbox before slashing $100 off the $299 retail price early in 2003. That means Microsoft is currently losing $225 to $250 on each sale. Add to that the $2 billon budget John O'Rourke, marketing director of Microsoft's Games division, estimates the company will spend over the next five years to make Xbox the leading video game console. If Microsoft sells 11 million units as predicted , it will lose approximately $4.5 billion ” almost 12 percent of the $38 billion mountain of cash it took the company 25 years to amass . Is Bill Gates crazy, or crazy like a fox? It depends who you ask.

Bill Gates will tell you Xbox fits into Microsoft's overall online subscription strategy. Microsoft currently sells a $49.95 add-on package, Xbox Live, which includes a 12-month Internet subscription to the service and a headset microphone that connects to Xbox for real-time voice chat. This fee doesn't include a broadband connection, which is required.

Figure 4.4: Xbox Live Web site

Market analysts will tell you Microsoft can afford to give away the hardware because the games are selling so well ”an average of 4.1 software titles for every Xbox sold. Matt Rosoff, a research analyst at Direction on Microsoft, explains that "the profit is really driven by the games in this business. In selling Xbox, Microsoft is installing sockets into which they can sell more games."

Sony will tell you Microsoft is giving away Xbox to kill the competition, their PlayStation 2.

Conspiracy theorists will tell you there's a chip in Xbox that beams your activities back to Microsoft.

Take your pick. Personally, I think Bill Gates wants a Microsoft box attached to every television set that is in turn connected to the Internet. Adding a TV tuner to Xbox would cost around 20 bucks and convert Xbox into a fullblown "delivery on demand" set-top receiver. The point is Microsoft isn't just a software company anymore and the reason for that is convergence. Bill Gates is willing to lose money on Xbox now because he has always gambled on the future.