Does Less Consumer Tracking Lead to Less Fraud?

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Here’s another reason to block digital surveillance: it might reduce financial fraud.  That’s the upshot of a small but promising study published as a National Bureau of Economic Research (NBER) working paper, “Consumer Surveillance and Financial Fraud. 

Authors Bo Bian, Michaela Pagel and Huan Tang investigated the relationship between the rollout of Apple’s App Tracking Transparency (ATT) and reports of consumer financial fraud. Many apps can track users across apps or websites owned by other companies. By default, Apple’s ATT opted all iPhone users out of tracking, which meant that apps and websites no longer received user identifiers unless they obtained user permission. 

The highlight of the research is that Apple users were less likely to be victims of financial fraud after Apple implemented the App Tracking Transparency policy. The results showed a 10% increase in the share of Apple users in a particular ZIP code leads to roughly 3% reduction in financial fraud complaints. 

The Methodology 

The authors designed a complicated methodology for this study, but here are the basics for those who don’t have time to tackle the actual paper. 

The authors primarily use the number of financial fraud complaints and the amount of money lost due to fraud to track how much fraud is happening. These figures are obtained from the Consumer Financial Protection Bureau (CFPB) and Federal Trade Commission (FTC). The researchers used machine learning and keyword searches to narrow the complaints down to those related to financial fraud that was caused by lax data privacy as opposed to other types of financial fraud. They concluded that complaints in certain product categories—like credit reporting and debt collection—are most likely to implicate the lack of data privacy. 

The study used data acquired by a company called Safegraph to determine the share of iPhone users on ZIP code level. It then estimated the effect of Apple’s ATT,on the number of complaints of financial fraud in each ZIP code. They found a noticeable, measu

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