Walgreens used to be very user-friendly place, the only major drug chain that declined to data mine its customers. No logging of their purchases, no gathering their personal and credit card data or building extensive, intimate dossiers of their habits and tastes. Walgreens was a refuge of privacy in an world of increasingly invasive retailing where those who decline to enroll in loyalty card programs are punished with higher prices. But with the arrival of Walgreens’ Balance Rewards program, those days are gone.

Every candy bar, magazine, drug. Walgreens is taking notes.

Now, Walgreens pharmacists and checkout clerks press customers for their rewards card with each transaction — the retail equivalent of a TSA pat-down — aggressively urging the unregistered to comply, or pay more.

But unlike other pharmacy chains, Walgreens is keeping its privacy policies in the shadows, if such policies even exist. No such information can be found on the firm’s website or in Walgreens stores. The company has repeatedly ignored requests to divulge the scope of personally-identifiable information being gathered, whether credit card information is included, and whether this data is, or will be turned over to third parties.

California Attorney General Kamala Harris isn’t taking the matter lightly. Today, her Privacy Enforcement and Protection Unit raised with Walgreens consumer concerns that its Balance Rewards program may violate California privacy laws.

California residents have the right to receive information identifying any third party(ies) to whom rewards programs may have disclosed, within the preceding calendar year, personal information for that third party’s direct marketing purposes, and a description of the categories of personal information disclosed.

But learning the full extent of Walgreens’ corporate spying may not be easy.

Walgreens CEO Gregory Wasson: No comment.

Walgreens CEO Gregory Wasson has ignored requests to produce his firm’s Balance Rewards privacy policies. The Balance Rewards Hotline is keeping mum too, despite promises to respond within 24 hours.

Nor is Walgreens providing any assurance of data security — the kind of catastrophic data grab hackers scored from T.J. Maxx in 2007, looting the credit and debit card numbers of at least 45 million shoppers. It’s a growing danger, now that rewards programs are talking to one another — the recent data-swapping deal between Chevron and Vons, for example. And when data brokers enter the picture, aggregating consumer data from multiple rewards programs, clear-cut privacy boundaries vanish as consumers lives snap into sharp focus.

According to the book “Brandwashed”, consumer data mining has grown into a $100 billion dollar industry, “secretly mining our digital footprints to uncover some of the most intimate details of our private lives, then using that information to target us with ads and offers ‘perfectly tailored’ to our psychological profiles.” That’s raising serious concerns by privacy rights organizations including the Privacy Rights Clearinghouse.

At a Safeway in Denver, a 24-pack of Refreshe bottled water costs $2.71 for Jennie Sanford, a project manager. For Emily Vanek, a blogger, the price is $3.69. The difference? The vast shopping data Safeway maintains on both women through its loyalty card program.
—The New York Times

The high price of privacy
Some may shrug off privacy fears as baseless paranoia by the tin foil hat brigade. But fairness in pricing becomes an issue once a company begins flexing its data mining muscle. Beyond the tariff paid by those unwilling to submit to surveillance, a recent New York Times report points out that retailers are increasingly manipulating prices based on individual profiles.

While it’s not illegal to charge customers different prices, the Times quotes Joseph Turow, a professor at the Annenberg School for Communication at the University of Pennsylvania, as saying “there’s a sense of fairness that’s derailed” when retailers are not transparent enough to give consumers any real power or choice. A 2005 survey by Professor Turow found most adult respondents did not know that retailers could legally charge different prices, but more than 90 percent said they would dislike a store giving different prices to different people within the same hour.

Is that where Walgreens is heading? Hard to say. The company will not comment on its snooping tactics or what it’s doing with the wealth of information being sucked up by the drug chain’s bright blue cards, each emblazoned with the word “happy” sixteen times. We're waiting for a reply from yet another request for transparency now that Walgreens has learned that Attorney General Harris is on the case.

Watch this space.