Report: Verizon Starts Customer Rewards Program to Collect Users Data

Telecommunications company Verizon reportedly plans to begin a new program which rewards users for providing their personal data to the company.

The Wall Street Journal reports that Verizon plans to start a program that would reward users with prizes in exchange for handing over certain personal data. The program, titled Verizon Up, is reportedly part of Verizon’s plan to build a digital advertising business on the same scale as Facebook and Google. In order to become an advertising player, Verizon needs user data.

Those that choose to take part in Verizon Up will earn credits when they spend over $300 on their Verizon bill, these credits can be exchanged for concert tickets or Uber rides. Verizon receives access to the customer’s interests, visited websites, location, and more in exchange.

Verizon’s wireless business earned the company $89 billion in revenue in 2016, a 2.7 percent drop from 2015, while the companies digital advertising arm brings in $7 billion a year. According to eMarketer, Verizon owns 4 percent of the current U.S. digital advertising market share, by comparison, Facebook holds 20 percent of the market and Google owns 41 percent. Many observers are critical of Verizon’s latest rewards program and the user data that they collect from it, Adam Levin the founder of data-security firm CyberScout, warned in a Huffington Post column that the “hidden cost of Verizon’s ’free’ rewards program is your data.”

Diego Scotti, Verizon’s chief marketing officer, discussed the new rewards program saying, “Some of our competitors, they have exactly the same thing, it’s just buried in the terms and conditions of the service. We are not hiding anything.” Others, however, worry that Verizon’s upfront approach to user data collection could pose problems for the company in the future.

Craig Moffett, an analyst at MoffettNathanson LLC discussed Verizon’s new reward program saying, “This just highlights how thorny privacy issues can be for telecom operators,” he said. “If they are going to be held to a higher standard than Google and Facebook, either by statute or simply by convention, then it will be very hard for them to effectively compete.”