Groupon Responds to Privacy Inquiry From Lawmakers

Groupon responded to a privacy-related inquiry from the Co-chairs of the Congressional Privacy Caucus in an August 10 letter. Representatives Ed Markey and Joe Barton implied tempered satisfaction with Groupon’s reply, but indicated they’d keep a close watch on the daily deals company.

In addition to detailing its data privacy practices, Groupon revealed second quarter sales information in its response to the legislators.

“Because it is growing at such a fast pace, I fear for the potential misuse of consumers’ personal information as more partnerships are created,” stated Barton in a press release.

The inquiry was prompted by changes made to Groupon’s privacy policy, announced by the company in July. In addition to clarifying the policy to improve readability and transparency, Groupon broadened its definition of Personal Information, and updated sections related to data tracking.

The lawmakers asked the company which merchants, service providers, and other business partners Groupon works with and whether they are held accountable to Groupon’s privacy policy. In addition, they wanted to know when it tracks consumers’ social media interactions and on what sites, and whether Groupon collects personal information of gift recipients that otherwise don’t have interactions with the firm.

Mobile data privacy is a key focus of the Do Not Track Kids bill, sponsored by Markey, a Massachusetts Democrat, along with Barton, a Texas Republican, and two other Representatives. Their letter asks the firm to provide information related to geo-location data tracking. Groupon said it does not currently access location data when its mobile app isn’t running; however, the company indicated it plans to enable this functionality in the future.

In the letter, Groupon General Counsel David Schellhase suggested location data gathering when the app isn’t running could be of value to consumers. For instance, someone may want to be notified of a lunch special nearby his current location at a certain hour everyday via email, which would require that capability.

“In order to choose a relevant deal for the user at the correct time, location information would need to be collected about the user just before [given time], even if the Groupon mobile application is not running on the device at that time.”

If and when Groupon does enable such a function, the company said it would require explicit consent from the consumer to gather location data when the app is not running.

“It’s appropriate that Groupon currently uses an opt-in feature for location-based services. This enables consumers to decide whether to grant permission for Groupon to pinpoint where a consumer is at any given moment so it can make offers tailored to that location,” stated Markey in the release. “Transparent, easily understandable privacy policies and practices are key here, and I will continue to monitor this rapidly developing area of the industry.”

Groupon gave some updates on its business, providing information on its sales results and service provider partners. The firm said it sold approximately 32.5 million Groupon vouchers on behalf of more than 78,000 merchants globally in Q2 of this year. It also said it uses ExactTarget as its email service provider. And, due to changes in its business, no longer uses Adobe-owned Omniture as its analytics platform. The firm gave no indication that the decision was related to any privacy concerns.

The daily deals service also described its voucher sales and fulfillment process: “After a typical Groupon offering closes, merchants receive a list of the Groupon voucher numbers that identify the vouchers sold. The merchant uses this list to validate the numbers on the vouchers when customers present them for redemption.”

Groupon also discussed data sharing with merchant partners, third-party service providers, and other firms, including Facebook. Because some people access the service via Facebook Connect, they may agree to permit Facebook to transfer some profile data to Groupon.

In some instances, such as when consumers purchase a magazine subscription, Groupon collects data “and requires the merchant to contractually agree to use the customers’ data solely to fulfill the offer.” In the case of Groupon’s relationship with travel firm Expedia, Groupon may share email addresses and “transaction details related to Getaways travel deals purchases on the Groupon Sites.”

The company also said it “does not use gift recipient information for any purpose other than fulfilling the gift.”