New Study: Reduced Consumer Tracking Leads to Reduced Fraud

​Less consumer tracking leads to less fraud. That’s the key takeaway from a new study conducted by the National Bureau of Economic Research in its working paper, “Consumer Surveillance and Financial Fraud.”
 
Using data obtained from the Federal Trade Commission and the Consumer Financial Protection Bureau, as well as the geospatial data firm Safegraph, the authors looked at the correlation between Apple’s App Tracking Transparency framework and consumer fraud reports.
 
Apple’s ATT policy requires user authorization before other apps can track and share customer data. In April 2021, Apple made this the default setting on all iPhones, ensuring that users would no longer be automatically tracked when they visit websites or use apps. This in turn dealt a hefty financial blow to companies like Snap, Facebook, Twitter, and YouTube, which collectively lost about $10 billion after implementation.
 
The authors of the paper obtained fraud complaint figures from the FTC and the CFPB, then employed machine learning and targeted keyword searches to isolate complaints stemming from data privacy issues. They then cross-referenced those complaints with data acquired by Safegraph showing the number of iPhone users in a given ZIP code.
 
According to the paper, a 10% increase in Apple users within a given ZIP code leads to a 3.21% reduction in financial fraud complaints. 
 
As the Electronic Frontier Foundation points out in a recent article about the study: “While the scope of the data is small, this is the first significant research we’ve seen that connects increased privacy with decreased fraud. This should matter to all of us. It reinforces that when companies take steps to protect our privacy, they also help protect us from financial fraud.”
 
Obviously, more companies should follow Apple’s lead in implementing ATT-like policies. More than that, however, we need better and more robust laws on the books protecting consumer privacy. California has passed a number of related bills  in recent years, most recently creating a one-stop opt-out mechanism for data collection. Colorado did the same. 
 
As other states and nations (and even CIA agents) wake up to the dangers of data tracking, this new study can serve as compelling, direct evidence showing why more restrictive settings – and consumer privacy – should always be the default.