During
the prohibition era of the 1920's, it is estimated that between
20,000 and 100,000 speakeasies existed in New York City. When alcohol
was banned, bars did not disappear, but simply went underground
(to basements and attics), and were disguised behind front
businesses, such as cafes, soda shops, and entertainment venues.
Today,
organized crime leaders use legitimate businesses, such as
laundromats or limousine companies, as fronts for illegal activity,
such as trafficking and racketeering. In
October of last year, eight members of
Brooklyn-based motorcycle gangs (the Forbidden Ones, the Dirty Ones,
and the Trouble Makers) were charged with trafficking for selling
firearms, ammunition and a cannon. The trafficking businesses were
run under the front of legitimate tattoo parlors operated by the
gangs. In January of this year, 32 members of New York's Genovese,
Gambino and Luchese Mafia families were arrested for engaging in
racketeering, extortion, loansharking and fraud under the front of a
legitimate private garbage hauling business.
Due
to such high profile arrests, the use of legitimate businesses by
organized crime syndicates as fronts for illegal activity is well
known. It is my contention that there is an analogous practice,
namely the use of legitimate businesses as fronts for activity that
is certainly unethical (and arguably illegal), that is even more
prevalent in New York City, but less well known. And it is not the
organized crime syndicates that are running this racket, it is the
entrepreneurs in the New York start-up scene. I am refering to the
advent of start-up companies as fronts for the collection of big
data.
This
is particularly true in the real estate sector. Many start-up
companies are setting up shop under the mandate of revolutionizing
New York's notoriously tough rental property market. However, these
businesses are in reality a front for the main objective of
collecting big data about the prospective tenants. More so than
Facebook or Twitter, or the various other forums companies use for
collecting information, in the real estate setting, companies are
uniquely placed to collect highly sensitive information about people.
Where else would you voluntarily reveal information so intimate as
residential history, pay slips, tax returns, and social security
numbers? This information is highly valuable to the companies
collecting it, and its collection is, in fact, the companies' primary
business objective.
As
I said above, indeed, unlike traficking or racketeering, the
collection of big data is not per se illegal. Thus, these start-up
companies cannot be deemed the same as the organized crime
syndicates, but are nevetheless analogous to them. There is something
that feels “icky” about these companies knowingly and
purposefully operating cover services as fronts for the real business
of personal data collection. Certainly issues of ethics and privacy
arise.
I
am Australian, and as a citizen of a country that does not even have
a national Bill of Rights, sometimes the number and nature of the
Bill of Rights that exist in the US seems laughable. (For example,
there is a New York City Taxi Cab Bill of Rights, guaranteeing such
supposed fundamental and crucial rights as “airconditioning on
demand” and “a clean trunk”.) But, in regards to the use of
businesses as fronts for the collection of big data, a Bill of Rights
seems in order. Obama's Consumer Privacy Bill of Rights, unveiled in
February of last year, is an imperitave tool in the effort to
regulate this practice.
The
Consumer Privacy Bill of Rights establishes regulations including
that companies should securely dispose
of (or de-identify) personal data once they no longer need it, unless
they are under a legal obligation to do otherwise. That is, companies
could well be required to dispose of income statements as soon as
they have been perused to ascertain that a prospective tenant meets
the threshold requirement for leasing a property, thus preventing the
companies from using the income information for any other,
unauthorized purposes and eliminating the incentive for the companies
to deceptively operate businesses as fronts for collection of data on
which they can then capitalize.
When
it comes to using start-up companies as fronts for the collection of
big data, the lines of illegal activity and legitimate business
strategies are blurred and somewhere in the ill-defined murk, lies
activity that seems dubious to say the least.
The ethics is debatable. The privacy issues are rife. Public
awareness, scrutiny, and regulation is required. The
implementation of the Consumer Privacy Bill of Rights cannot happen
soon enough.
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