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Credit card companies have introduced a system of profiling their clients through identifying their behaviors from the products which they purchase using credit cards. This profiling has elicited intervention of the law enforcers who claim that this strategy is illegal. The profiles are used by the companies to determine behaviors and advertise their products to interested customers. Moreover, the companies are analyzing the data and using it in various fields including lowering the card limit for customers who pose risks. In this regard, the government has intervened and signed agreements to stop these heinous acts. Some companies have undergone serious fines and losses after they were noted to profile cardholders.
Competitive Strategy and Its Support
Customer satisfaction and trust are unexceptional attributes that must be considered intimately for successful sales. Consequently, the ambitions of credit card companies to build good relationships with their customers have promising and outstanding outcomes for them. The relationships warrant that the cardholders will pay debts and become loyal to the companies that they feel comfortable with. In a bid to build these relationships, the companies take profiles of the customers and determine their behaviors to gain their consent. The profiles are retrieved from the products that the cardholder purchases and the services he/she attends.
All these strategies are supported considerably by the data stored when the customers use their cards. Moreover, the information provides knowledge on the likes, needs, and requirements of the cardholders which makes it easy to establish the relationships.
Benefits of the Analysis
Analysis of the purchase data and construction of the behavioral profiles allows the credit card companies to foresee the cardholders posing elevated threats. Apart from securing their money through evaluating the trends and identifying the abnormalities, the companies flag the users with inconsistent spending behaviors and track the criminals. The data is usually used for investigations of criminal activities by the law enforcers. Furthermore, the determination of accurate future promotions is reliant on this data that also secures the customer’s card from fraud. Finally, the behavioral profiles enhance the companies to reject cards, adjust the charges, and convince the customers to pay the debts.
Ethics and Privacy
The act of profiling the cardholders is unethical because the law enforcers have restricted it. This strategy invades the privacy of the cardholders and uses it to manipulate their decisions. Furthermore, they take the roles of law enforcers and make restrictions on the customers’ credit cards. Lastly, the life of individuals should remain personal unless they have the consent of the profiling, or are involved in matters that compromise the security of others.
In a bid to understand the details that the credit card companies possess and how they attain the information, the following table and paragraph will exemplify the analysis performed when establishing the behaviors..
|Purchases made through credit card for 6months|
|Fuel||3 bales of flour|
|Skating boots||6 kg of sugar|
|Mattress||7 trouser, 10 shirts, and 3 jackets|
|Ball for games and sports’ shoes|
|Sofa set and table|
These purchases can reveal that the cardholder has interests in football and other games like skating due to the presence of the boots and ball in the list. He/she seeks comfort or motivation from counselors for some reason. He/she has a car and lives in a rented house. The cardholder does not use credit cards frequently when purchasing products because the items bought are few within six months.
The Relevance of the Data
The credit card company will have the basis to inform the customer when better skating boots and sports shoes arise. They will notice on the promotions available food products like sugar and flour. Moreover, the customer will be informed of other house items which include wall units and cabinets. Finally, the information on risky customers can be dispatched to the selling businesses which include affiliate and marketing companies.