I am hearing all about these apps that will give you cash back for uploading your receipts or linking your store rewards card. How does that work? Are these apps just trying to collect data from its users? Why would they give you money for something so simple?
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Yes, they collect information about their users and then sell that data to others like marketers.
They’re making more money than what they’re giving you. By sending targeted ad/selling information you provide and what is freely available on the internet or purchased from other sources.
For Example: With receipts, they know what you purchasing, they can cross reference this with other information to know that your a family of 3, living in a suburb, and you recently had/going to have a baby.
From there, they can show more ads about baby products on websearches or sell (“share with partner companies”) the data they have accumulated. And that’s just some of the examples.
For privacy reasons, Best Buy can’t ask Target if the debit card you use has been used for any transactions or what you were buying from Target. Best Buy wants this data because it helps them figure out if they need to make their prices more competitive with Target’s.
There are also a handful of other passive tracking methods the two companies would LOVE to have linked. For example, one or both might be using bluetooth beacons in-store to track which aisles you walk down with your phone and if there’s a beacon at the register they can correlate that with a purchase. Best Buy would LOVE to know if when you buy a thing they stock at Target if it was an *impulse buy* or the purpose of your visit. Again, that helps them understand how to talk you into going to Best Buy instead of Target. Again, two competing companies aren’t going to share this data with each other.
The app, on the other hand, can stick its hands in all of that data. In this case you’re basically giving the app all of the data from each store. They sell that data back to participating stores and your cash back is what’s left over after they take a cut from what they’re paid for it. The stores pay for it because they hope using that data is an edge they can use to steal business from competitors.
The whole thing stinks for the same reason as all advertising: the cost of everything you buy has to account for this advertising cost, and the only people who provide data about if it works are people who sell advertising.
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