Will tagging drive customers away?

A recent report in The New York Times caught my eye, detailing the unfortunate experiences of a Canadian who, while visiting his son in California, rented a car to do a fortnight's sight-seeing.

An innocent enough aim, and the itinerary - taking in Las Vegas in Nevada and the Grand Canyon in Arizona - sounded nice enough.

Unfortunately, the holidaymaker was unaware that his rented car contained a GPS-based tracking system. And equally awkwardly, he was unaware of the small print on the contract he signed when he picked up the keys. His $260 flat-rate rental only covered California: in Arizona and Nevada he was racking up an extra charge at the rate of a dollar per mile.

By the time the keys changed hands again back at the rental depot, his bill had ballooned to more than $3,400.

It's a cautionary tale, of course, but not just a warning for unwary travellers or the vast majority of us who habitually ignore small print.

The rental company, ironically a franchise of the Payless Car Rental chain, justified its inflated bill with the aid of a map, showing the exact route taken by the tagged hatchback. The customer, claiming that the nature of the charges was not made clear beforehand, quite understandably didn't want to pay. The writs are now being readied.

The rental company has the customer's signature on a contract, but the customer argues that the penalty clause was not adequately explained. And he is adding invasion of privacy to the counter-offensive.

As the Times notes, business travellers might be even more horrified to learn that their exact route might be quietly recorded. "You don't always want your car rental firm knowing where you're going," former investment banker Donna Williams told the newspaper. "What if you're doing your due diligence [prior to an acquisition]? If your rental firm knows who you are, which company you work for, and where you are, it could threaten the whole deal. It could even be used as insider-trading information."

That might be an extreme view, but it illustrates the hidden dangers that await firms deploying monitoring technology.

The merits of studying customer behaviour have been a subject of frequent debate since 1992, when US retailer Osco first uncovered an unexpected correlation between sales of beer and sales of nappies in the early evening, prompting notions of rearranging shelves to promote impulse buying among working fathers. Technology has, however, greatly amplified both the potential benefits for firms, and the PR pitfalls they might stumble into.

It's no coincidence that radio frequency identification (RFID) technology, which uses unobtrusive silicon responders to allow monitoring, has been recast as simple digital barcoding by retailers that plan to use it in supply chains and stores. If it were more accurately described as hidden, silent, remotely-readable digital barcoding, it would not sound so innocuous.

Of course firms like Tesco and Marks & Spencer want to deploy RFID tags for sound business reasons. But those that do decide to deploy such things must do so with a lighter touch than that seen at the San Francisco franchise of Payless Car Rental. Assuming they want to keep their customers, that is, rather than track them as they head elsewhere.