Last week during the Data is Money panel at SXSW, Aaron Patzer, the CEO of popular personal finance management Web site Mint.com, ignited a firestorm of controversy by bragging about the high quality of real time data that Mint is able to see -- such as which movie rental services are used most, and the value it would have to hedge funds.
The notion of selling of user data isn't a new idea, but it disturbed financial writer Felix Salmon and has caused numerous individuals to cancel their Mint accounts.
Given the sensitive nature of the subject and importance of privacy and anonymity, we asked Patzer to explain what Mint does with your data, how it makes use of data and what the difference is.
In order to understand the issue, we first need to know the difference between our data and aggregate data, and how this is different than anonymized data. Our data includes every single transaction that we make and is logged into our Mint account; there is no doubt in anyone's mind that this is important to keep private. Aggregate data is the sum, or whole amount, of a particular group like the Movies and Shakers example.
Anonymized data is different from aggregate in that it's used to contain personally identifiable information but it was changed to obfuscate, or hide the actual individuals. The problem with anonymized data is that as a recent example proved, it is possible to reverse the data to identify a specific individual such as in the Netflix Million Dollar Prize contest.
Mint also has safeguards in place to ensure that aggregate data cannot be traced back to an individual. "We ensure that there are at least 50 data points per month for a particular merchant or in a particular zip code before we'll do any aggregate data, otherwise we just say not enough information.", stated Patzer adding that the safeguard is, "not only for the privacy purposes but it's just not accurate unless you have enough data points."
If you use Mint to manage your finances the recent attention to data practices shouldn't push you to close your account. The use of aggregate data has been used by Mint for the past several years to help users compare their spending to others, identify the worst banking fee offenders and even could have predicted the recession before traditional indicators showed up.
The bottom line is that Mint uses aggregate data, which cannot be traced back to an individual user, to better serve its users and, in the case of bank fees, the general public.
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