Caught out

PUBLISHED : Wednesday, 11 August, 2010, 12:00am
UPDATED : Wednesday, 11 August, 2010, 12:00am

The octopus with its eight tentacles has the legendary ability to grab many things at the same time. But it might have grabbed one too many this time. I am, of course, referring to the controversy that has engulfed the Octopus card company over its practice of selling customers' personal data to other companies for marketing purposes. Since its gaffe made the headlines, it has been devoured by the press and public.

The controversy feeds popular distrust of big business. In the hands of profit-hungry companies, personal information is no more than a tool to boost their bottom lines.

Octopus Holdings might not have broken any laws. But it has broken the trust of the public, and the norms of decency. What is legal isn't necessarily socially acceptable. Over 41/2 years, it pulled in HK$44 million from the sale of personal data involving some 2.4 million customers who signed on to a rewards scheme. Customers might have signed their consent on the dotted line, but it was rendered meaningless by the fine print. Besides, consent for usage is not consent for making profit, though legally one may encompass the other. As the crisis unfolded, Octopus' chief executive was caught publicly making contradictory statements. Prudence Chan Bik-wah violated the cardinal public relations rule that 'a fault confessed is half redressed'. The gig was up when the lie was exposed.

If Octopus had been above board about its business practices, its consent statements would have been printed in a readable type size, and not been deceitfully microscopic. As they say, the devil is in the detail. It is all too common a practice in this city where customers are asked to consent to statements too small to read. I urge the government to take prompt action, legislative and otherwise, to kill this widespread, unfair practice. Otherwise, unsuspecting customers will again fall victim to less-than-scrupulous operators.

In any business in it for the long haul, short-term gains should be outweighed by the durable trust of its customers. In my own retail business, for instance, we don't play tricks with difficult-to-read consent statements, simply to avoid any unnecessary disputes with our customers who keep us in business. Any customers signing on for their VIP cards are asked to indicate 'yes' or 'no' if they agree to accept any promotional material from us. If they decline, that is the end of the matter. Some 40 per cent of applicants chose to leave this answer blank, and we construe this non-response as a 'no'. Personal information obtained from our card members is only accessible to a few people higher up in our company - no one else. If we hold a joint promotion with other companies, the message will only go out from us, never from our commercial partners. Surrendering one's personal information to a company is an act of trust. Companies betray it at their own peril, however cleverly they conceal their questionable practices.

A company's reputation is its most precious asset. Once damaged, it is difficult to repair. In the Octopus case, the public has been fed half-truths piecemeal, some of which have turned out to be whole lies, leading one to wonder if the current disclosures are just the tip of the iceberg.

Hong Kong people are bombarded by cold calls from telemarketers day in, day out. They are powerless to stop them. Certain companies cleverly sell only part of their data, such as the names and phone numbers of customers. When confronted with how they come by this information, telemarketers often hide behind the claim that the call was made randomly. The poor customers have no way of knowing who gave out their personal information and for what purpose.

Granted, maximising profits legitimately is par for the course in today's corporate culture. Chan might have been the lightning rod for public wrath, but the company's board of directors bears the ultimate responsibility for how managers go about maximising profits within the bounds of propriety.

The Octopus fiasco is a study in board behaviour failure. Its political antennae are obviously not working. As a business with a virtual monopoly of the cashless payment system, in which customers do not have a choice, it should bend over backwards to be fair to users. In any marketing scheme, customers should have been given the choice to opt out. The type size of the consent statement must be conspicuously big. Finally, Octopus should never forget that the Hong Kong government is its major shareholder. Its corporate conduct is therefore held to a higher standard, not just in complying with the law, but in being ethically unimpeachable.

As Octopus crawls out of Hong Kong into Shenzhen, it must avoid any murky moves that risk a repeat of its biggest blunder. Otherwise, this mess may spread across the border.

The widening wealth gap has fanned the flames of anti-business sentiment. What was acceptable even 10 years ago is no longer so today. Now, more than ever, every business owner or operator must mind his p's and q's in his dealings with his customers. A failure to do so is not just bad business practice, it corrodes social harmony, pouring acid on rising social tensions.

Michael Tien Puk-sun is a Hong Kong deputy of the National People's Congress and chairman of G2000, a garment retailer