In recent years, marketers have come to greatly appreciate the value of mining big data to collect information on their customers that will help shape future sales strategies. Their data collection processes help in another way, too - they can play a role in preventing fraud. By monitoring consumers' spending habits and looking for abnormalities in purchases, companies can easily detect when their customers' financial information has been stolen and abused.
InformationWeek explains that if an individual has a history of making small, modest purchases before suddenly purchasing a fancy snowmobile out of the blue, big data can provide real-time notification that something suspicious is afoot. By keeping an eye on customers and being careful to ensure data quality, companies can take significant steps toward reducing fraudulent activity.
It's important to note, however, that firms must be careful with the delicate balance between preventing fraud and invading privacy. If companies are too meticulous with monitoring their customers' spending, they might go too far, intruding on consumers' personal information. Doug Clare, vice president for fraud solutions at FICO, says this dilemma can be a tricky one.
"If they want to, they can stop all fraud by declining every transaction," Clare told InformationWeek. "Or they can prevent zero fraud by approving all of them."
The New Statesman recently reported that privacy is a rapidly growing problem with big data. The news source found that Harvard's Data Privacy Lab managed to identify 40 percent of individuals who had taken part in the supposedly anonymous Personal Genome Project. We've reached the point where data collection is no longer about finding broad trends about swaths of the population. Instead, it's become a practice of targeting specific people.
Big data can have a profound effect on marketing, even for benevolent endeavors like preventing fraud, but people's privacy is a priority as well. Businesses must proceed with care.