by: Debbie Dragon

Before the world was introduced to a glorified fish tank full of egotistical housemates, George Orwell described a rather more disturbing phenomenon in his book Nineteen Eighty-Four. The now ominous term “Big Brother” was used to describe an omnipotent being that watched, analysed and controlled every aspect of Oceania.

Indeed, while the producers of the popular TV show might not have the same tyrannical motives as the Original Big Brother, the concept of a controlled environment is still very much alive today. Many people would agree that surveillance and an increased interest in the everyday activities of the population is a good thing for our national security. But, how about when credit card companies start to play the role of Big Brother?

The results of a new study into the psychographic profiling techniques used by the major credit companies will be revealed on May 22nd, 2010. Rightly or wrongly it is believed by many experts that credit card companies are closely monitoring their customers’ spending habits and adjusting certain customer’s terms in light of their results. Credit companies are not only tracking the amounts you spend on your cards but where and how you are using them to determine how credit worthy you are. Plastic spending at a casino/ betting establishment, a second-hand clothes store or using a credit card for bail bond services are all likely to draw negative attention to your account.

Is Credit Monitoring OK? Pros and Cons

While the state of modern society isn’t quite the totalitarian dystopia that Orwell described there is undoubtedly the feeling that our privacy is under constant attack. Surprisingly it is the government who have stepped into to protect our privacy. The new study, due in 2010, will assess whether credit companies have indeed been tracking our spending habits and basing your credit status based on the data collected. Credit is a business though and all industries need to protect themselves which is why there is some justification to this kind of practice. Indeed, how would the companies catch the high risk clients if not?

Are they taking it too far though and should these institutions not be able to have so much control over our personal lives?

Pros of Closer Surveillance

High risk consumers = higher interest rates and fees. As with many things in life it is often the minority that have the power to spoil it for the majority and the credit industry is no different. A small percentage of suicidal spenders are a financial liability to credit companies and the only way to offset the risk they generate is to increases prices. By closely monitoring each client and building up a detailed profile based on that person is one of the most effective ways to protect the companies and the majority of their clients who are responsible borrowers.

Cons of Closer Surveillance

By tracking every transaction you make the credit card companies effectively have a complete personality profile of you on record. Every transaction, whether it’s buying a coffee every morning or spending money at the convenience store, says something about you and by tallying all this information together the companies can potentially draw up a pretty accurate portrait of your life. This might be acceptable for government organisations wishing to protect our liberty but for a private company intending to sell us a product for profit it is slightly more concerning. This type of tracking can lead to some people being unfairly discriminated against just because of where they regularly shop or worse the information could be used to pressure/ persuade vulnerable clients into taking certain offers which they can’t immediately afford.

There are obviously positives and negatives on both sides and coming to a realistic compromise will be difficult. For many customers who have good borrowing habits none of this should be a problem but it pays to be wary about how and where you chose to use your credit card. One too many “inappropriate” or “questionable” transactions could send your credit rating downwards and affect your long-term credit future. Ultimately though, if you can show you’re a reliable customer who respects their spending, you shouldn’t have to worry whether Big Brother is watching you or not.

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