As a long-time analytics practitioner, I am well aware of the dangers of using data without fully understanding where it comes from and how it is generated.
There are numerous ways in which the data one gets isn’t quite what it seems: the same data item may be named differently in different systems, different items may have the same name, the data item may be defined in ways subtly different from what commonsense may indicate etc.
All these (and more) are well-known issues that surround data and explain why seasoned analytics experts claim that the lion’s share of an analytics project is likely to be data-cleansing, transformation etc. rather than modeling.
But recently I came across an unusual source of bad data: good management.
We have been working with a retailer on ways to assign their store point-of-sale transactions to households so that we can analyze a family’s purchase patterns across multiple shopping trips.
A common problem in this sort of exercise is the need to group individual shoppers into households. Since different members of a household may have different names, credit cards etc,. the customer is often asked for a phone number at the checkout by the cashier who’s ringing up the sale.
Using third-party databases of landline numbers and mobile numbers, we can identify which of the supplied phone numbers is a landline number. Armed with this, we can collect all the transactions with the same landline number and infer that all these purchases were made by the same household.
Can you spot the weak link in this straightforward scheme?
The cashier has to remember to ask the customer for their phone number. It is extra work for the cashier and when there’s a long line of impatient customers in front of you, it is easy to forget.
So what do we do? Incentives to the rescue!
Management sensibly (after all, they were heeding the legendary Peter Drucker’s advice: “What gets measured gets managed”) decided to give store associates a cash bonus based on how many phone numbers they captured.
As expected, the phone number capture rate went up after the incentives were put in place and the retailer was able to assign many more transactions to households than before.
But we noticed some oddities:
- Some households visited a single store twenty or thirty times a day!
- Some households had several hundred store transactions annually!
We studied these odd cases and discovered something interesting: these “crazy shopping” households were really dozens of households rolled into one! The reason these distinct households were grouped together were because they had a common phone number.
And how did they end up with a common phone number?
Because the cashier who rang up their purchases punched in the same phone number for everyone.
Perhaps these customers declined to supply a phone number, perhaps the cashier neglected to ask, who knows ….
Whatever the reason, for a small number of cashiers, it was just too tempting to simply punch in a fake phone number and make their bonus rather than do the right thing.
After this came to light, the retailer was able to mitigate this “phone number fraud” by first cross-checking every entered phone number against a list of store phone numbers and cashier phone numbers etc. This helped and was a good first step but it is not enough. We are continuing to refine the fraud mitigation algorithm using data mining techniques.
What did I learn from this experience?
I have resolved that whenever I am working with data that was created by people (rather than produced by machines), I will try to understand if the data may be distorted by incentives affecting the behavior of the person(s) creating the data.
And the next time a cashier is ringing up your purchases in a store, see if he/she is entering what looks like a 10-digit number without even asking you 
