Weblining (Internet Redlining)

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WEBLINING (INTERNET REDLINING)

The Internet, particularly via e-commerce, takes one's personal information to unprecedented levels of common knowledge. On the one hand, companies argue that access to greater levels of information makes them more efficient and more able to meet the needs of their customers. On the other hand, privacy advocates caution about the Internet's ability to excessively invade personal privacy, with potentially ugly consequences. One such violation brought about by the dissemination of personal information is the practice of Weblining, or the use of the Internet by businesses to engage in "redlining" to unfairly discriminate against certain persons or groups.

Weblining sometimes involves a very blatant process of grading customers. For instance, a company's account listings may include ratings for individual customers that help the firm determine how much time, effort, or investment should be devoted to those customers. Such ratings are based on a number of factors, but the common denominator is that those are customers who, by various measures, are determined likely to generate a greater amount of money for the firm; because of this, such customers receive higher ratings. Once a lower rating pops up on an individual's account, for instance, the company employees may be less motivated to go out of their way to meet that customer's needs. Some companies—particularly banks"were quite open about such practices, according to Business Week. While this form of redlining raises serious ethical questions, the companies aren't necessarily doing anything illegal unless they actively discriminate in ways that violate existing discrimination laws.

The temptation for companies to engage in Weblining is significant. Obviously, companies want to devote their resources—marketing, paperwork, retention, and so on—to the most commercially viable segments of the population in which their products and services are likely to find an audience. The relationship, in this sense, doesn't assume that the customer is always right. Rather, the customer warrants attention according to some measure of the customer's worth.

Data collection and data selling grew into an industry in its own rite in the late 1990s and early 2000s. The speed, sophistication, and breadth of information available on the Internet created a situation in which thousands of databases stored information that could be used to generate extensive customer profiles and possibly to engage in Weblining practices. While companies have always actively monitored their customers to weed out those less conducive to profit making, the level of technology made available by the Internet allows companies the opportunity to create, according to Business Week, "the equivalent of profit-and-loss statements on every customer." According to Forrester Research, nearly a quarter of all companies were beginning to micro-segment their customers by 2000, and the percentage was growing rapidly. Many companies see this as an effective management practice that engenders optimal efficiency and maximizes use of resources.

Redlining generally assumes that, for geographic—and, by implication, demographic—rather than individual reasons, a particular customer constitutes a greater risk or a potentially lower return to the firm, and thus the firm responds by placing greater restrictions on the company's dealings with that customer. Customers judged—rightly or wrongly—to represent more of a risk (or less likely to bring lucrative business to a firm) may be penalized in a number of ways. For instance, a firm may be less likely to give a low-rated customer the benefit of the doubt after a bounced check, may institute higher service fees, may offer their special deals only to their more highly valued customers, may perform service at lower levels of quality, and so on. On the Internet, redlining compounds the geographic discrimination with other forms of market segmentation based on electronically collected data.

Perhaps the most benign problem associated with Weblining is that it may proceed based on information that is derived out of context, irrelevant for the issues at hand, or that it otherwise generates baseless assumptions upon which companies act. But with such personal information filtered through several databases and sold from company to company, the meaning behind the original information often grows diluted, resulting in a general profile of customers that may have little relevance to a particular company, and perhaps even little resemblance to the individual. In the end, individuals are penalized for their predicted, rather than their actual, behavior.

Perhaps the most serious problem with Weblining, according to privacy and social activists, is that it's not only customer-related information that is stored and used to generate profiles. That is, companies collect more than credit histories and shopping habits. Individuals' race, ethnicity, sexual orientation, personal habits, Web-browsing practices, lifestyles, health status, political persuasion, and other private information can also be obtained rather easily. Critics warn that, in the wrong hands, such information could be used to discriminate based on factors that have nothing to do with potential value as a customer, but rather based on bigotry, malice, or social prejudice.

The late 1990s and early 2000s saw a string of lawsuits charging companies with using the Internet to redline neighborhoods and social groups. In 2000, Wells Fargo discontinued its online home mortgage operations after the Association of Community Organizations for Reform Now (ACORN), a leading housing advocacy organization, filed suit against the company claiming it violated the Fair Housing Act by using its online home-search system to steer individuals away from certain housing districts based on racial classifications and stereotypes about racial "life-styles." Although Wells Fargo claimed that it maintained no control over the "Community Calculator" service for which the company contracted, which used database information to generate profiles of neighborhoods and "lifestyle indicators," the company decided the service's editorial content was at odds with Wells Fargo's practices, and the site was discontinued. That same year, Kozmo.com was slapped with a lawsuit for allegedly denying delivery service to residents in predominantly black neighborhoods in Washington, D.C., based not on individual information but on geographical location.

The end result of Weblining, as with redlining, is to force certain segments of the population to pay more—in one way or another—for the same service, or to close those segments off from services altogether. Weblining acts as a barrier to social mobility as well. As more and more economic activity shifts to cyberspace, Internet-based discrimination will have farther-reaching effects. Since Weblining typically victimizes underprivileged groups, to compound their difficulties puts them at an even greater disadvantage.

In effect, then, Weblining both proceeds on and contributes to social stereotypes. Since the information derived through databases necessarily only reveals a tiny proportion of relevant personal information, the interpretation of that data necessarily falls back on existing social assumptions about the tastes, means, and risks associated with social groups. But by acting on those assumptions and tailoring their products and services according to their expectations, companies effectively limit the choices available to those groups to what is expected by social stereotypes. Thus, Weblining segmentation can prove a self-fulfilling prophecy, and thereby limit the amount of social mobility and cultural interchange available to society.