JUNE 4, 2019
Teresa Smith hoped she could keep news of her impending divorce a secret, until Square Inc. blabbed about it to one of her friends.
The day after Ms. Smith, a horse trainer living outside Washington, paid the retainer for a local divorce attorney in late 2016, an acquaintance forwarded her an email full of details about the transaction. The attorney had swiped Ms. Smith’s credit card through a Square device, and the payments company automatically generated the receipt that wound up in her friend’s inbox.
“I might as well have put it out on Facebook or took out a front-page ad in The New York Times,” Ms. Smith said.
With access to years of data on the purchase activity of hundreds of millions of unique credit and debit cards across millions of small businesses, Square has a window into spending patterns that few other tech companies can match. By supplementing that data with contact details that shoppers provide to Square for the purpose of getting digital receipts, the company is able to assemble expansive profiles of consumer behavior that it can use to run marketing and loyalty programs for its small-business customers.
But misfires happen: Square has forwarded receipts documenting transactions as mundane as a cup of coffee and as sensitive as an obstetrician’s visit to people who were uninvolved in the purchases, according to emails reviewed by The Wall Street Journal. In some cases, neither the purchaser nor the recipient could say why Square sent receipts to the people it did.
At issue is the methods that tech companies employ to make money off of the financial data of their users, as well as the degree to which those companies disclose or get consent from their users about those efforts. Data on individuals’ credit-card transactions can be particularly delicate and more revealing than their social-media posts or web-browsing activity. The Journal reported last year that Facebook Inc. requested detailed information from large U.S. banks about their customers as part of an effort to offer new services to users, but that data privacy emerged as a sticking point.
Ms. Smith said that when she complained to Square about her experience, she was told that her friend’s email address was previously used to get a copy of a receipt from an earlier purchase made with Ms. Smith’s at a different Square vendor, a chain of events that Square confirmed to the Journal. Square’s policy is to send digital receipts to the phone number or email address on file automatically unless that person opts out.
“Square said, ’We didn’t do anything wrong’” Ms. Smith said. “The hell you didn’t.”
“While receipts received by the wrong person are incredibly rare, even one is a really bad experience,” a Square spokesman said in an email. “We’ve already made a number of changes to the experience, resulting in a more than 50% decrease in customer issues in one year, and we have more improvements in the works.”
The Square spokesman added that digital receipts could be received by the wrong person for a variety of reasons, including consumers sharing a credit-card number, accidentally sending the receipt to a recycled phone number or seller or buyer error.
Square has been issuing digital receipts to consumers since its earliest days but started building customer-engagement and marketing services around them more recently. The company relies on consumers to input an email address or phone number that it then syncs to a particular card. It doesn’t verify whether the contact information it associates with a card belongs to the cardholder, but it provides a link with each emailed receipt that lets consumers decouple a card from an email address.
At a May 2017 investor event, Square executive Jesse Dorogusker said that in the prior 12 months, Square had sent over 350 million digital receipts and used that data to help build a customer directory of 90 million emails and phone numbers.
“We know who bought what from whom, on what day, with what payment instrument,” Mr. Dorogusker, who leads Square’s hardware business, said at the event. “And with something as simple and fundamental as a digital receipt, we can create a valuable customer directory and a suite of tools that take advantage of it.”
A business that uses Square can tap that directory to send coupons, promotional material or other messages to its shoppers for a monthly fee that starts at $15. But the company must walk a fine line between offering services that its small-business customers value and making sure those services don’t alienate shoppers. Square says it doesn’t sell underlying purchase data or contact details and that small businesses can’t view the email addresses or phone number in the customer directories that Square compiles, unless an individual gives that contact information to the small business.
At Home on the Range, a kitchenware store in Livingston, Mont., asked Square to disable the automated digital receipts following the 2017 holiday season. Owner Jennifer Flight said she heard complaints from a number of customers whose spouses had received itemized receipts for their own Christmas gifts.
Ms. Flight said that the issue of receipts going to someone other than the purchaser generated “the most negative of all of the responses we’ve had from customers.” She said customers didn’t believe her when she explained that the receipts were likely the result of information they provided to another Square business.
“It was clear that in his mind I had dropped from the ranks of friend to salesperson, scheming to get his information to market to him,” Ms. Flight said about one particularly peeved customer.
Often, a complaint about a misdirected Square receipt will involve credit cards shared by spouses. A wife may sign up for Square’s digital receipt program and get notified every time her husband makes a purchase with that card at any Square business.
Lucille Conforti, a florist in Fishkill, N.Y., processes her customers’ payments with Square and has gotten calls from spouses who had surprise gifts spoiled by an errant receipt.
“God forbid anyone was having an affair,” she said. “You’d see everything.”
Courtesy/Source: Wall Street Journal
