Is it Legal for Businesses to Employ Data Mining?

is it legal to data mine

Data mining plays a vital role in today’s digital business environment where credit card transactions, online shopping, and browsing on the Internet allow businesses to gather data on their customers. The information gathered allows a company to create targeted advertising, gauge the success of various marketing efforts, and make informed business decisions.

Data mining is a process where algorithms are used in one of two ways to find information. The first method is when an entity uses subject-based algorithms to analyze information already gathered about a person. The second method is when an algorithm is used to find patterns in a person’s behavior.

The government also engages in data mining for the purposes of tracking persons of interest and preventing crime, and the topic has been heard in court cases involving government intrusion and the right of a citizen’s privacy. Business owners have a duty to their customers and to the public to operate in a transparent, honest, and forthright manner, and it’s important to understand how data mining may fit into the modern business’s strategy.

Lack of Clarity on Data Mining & The Fourth Amendment

Over the past few centuries since the signing of the Constitution, various legislative bodies have attempted to clarify the legal definition of privacy of citizens in the United States. However, the Fourth Amendment to the Constitution, which is probably the most well-known law on privacy, doesn’t offer specific language on data mining. Computers didn’t exist 200 years ago, and there hasn’t been a defining court case on the matter to settle the law.

Court cases have been decided over the years regarding a person’s “reasonable expectation of privacy,” but the ability of a business or government entity to use data collected from a person’s habits and purchases is a gray area still under discussion in legal circles. Further, there hasn’t been any legislation passed that would specifically or outright ban data mining by private parties.

According to the Harvard Law Review, one famous instance of a private entity conducting data mining was when Target analyzed the shopping habits of its customers to figure out which shoppers had become pregnant and sent them advertisements for pregnancy-related items.

The Future of Privacy and Data Mining

One suggestion regarding privacy protections and data mining could come in the form of computer code written into the algorithms used to gather data and the databases employed to house that information. These pieces of code could protect a person’s privacy from government intrusion, as well as from businesses seeking to gather data on customers.

However, businesses today may use data mining legally, and many of the world’s largest companies do so with every interaction made with a customer. An article on data mining from The Atlantic reveals that online web giant Amazon runs its recommendations system through a type of data mining known as association learning and employs it in a predictive manner that attempts to guess a customer’s next purchase or activity.


Data mining is an incredibly important tool for modern businesses looking to find a space within the busy and competitive marketplace. Small businesses not only have competition from other small businesses, but they also have titans like Amazon, Wal-Mart, and Target breathing down their throats through online shopping. Although its legality may change in the future through government legislation, data mining remains legal for businesses today.

Related Resources: