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Send a $5 gift card to your friend free? What’s the catch?

New online marketer Wrapp comes in the form of an app, and accesses user information through Facebook.

There’s a saying that’s used a lot in the online world: if you’re not paying anything, you’re not the customer, you’re the product. It’s often applied to Facebook where the service costs nothing but makes a small fortune gathering information you provide to turn around and target advertisements at you. You might also hear it applied to Google where searching for something might be free but advertisements will eventually creep in based on who the site thinks you are and what you might be. In both cases, the real customers for the site are advertisers. You are the thing being sold.

Sounds cold, I know, but it’s hard to dispute.

So when the new online service Wrapp debuts, and it debuted yesterday, and offers a chance to send gift cards from big-name stores to your friends for nothing, one wonders what’s in it for them.

Wrapp works through your smartphone or tablet. “When you download the Wrapp app, you allow it to access your data on Facebook,” says Wrapp CEO Hjalmar Winbladh, “because you access data you have on Facebook where you have your friends, it actually shows that data through the Wrapp app and by clicking on your friends' pictures, you easily gift at that person.”

At that point, your friend gets a message saying that they can redeem this gift card if they too download this app from Wrapp. Winbladh says personal details aren’t forwarded on to retailers but you’re still being profiled.

“Based on the demographic of that person, very simple demographic like age, gender and location, that is data that we are letting a retailer target,” says Winbladh.

And why would The Gap give away gift cards? The idea is that it’s a more efficient way to advertise. “The retailer is spending a tremendous amount of money of course on advertising in general,” Winbladh says.  “And instead of spending that money on TV advertisement, or paper advertisement in newspapers or direct marketing, they'd actually rather give you that opportunity to give that money to the receiver - that friend you're giving to. It's a much more elegant for them to make sure the money goes to the person that's actually coming into their shop.”

So instead of the newspaper bringing the product to the consumer, you bring the product to your friend.  “We already know that ties between people in social networks can be power channel for marketing a product or brand,” says Alessandro Acquisti, co-director of Carnegie Mellon University's Center for Behavioral Decision Research. “This new application takes things one step further, effectively enlisting your friends as their own marketing agents.”

Wrapp is after consumer profiles, data from you and your friend. And those cards could be a great investment. “This data is being used to match consumers to buy products which otherwise they may not have felt the need to buy,” Acquisti says. “As consumers we pay twice: first with data, later with our pockets, due to the data we've revealed about ourselves.”

So are we at a point where we can sell our data? For five bucks at The Gap? Acquisti says if so, be careful about what happens once the sale's made.

“In most of these transactions, the exchange is not a case where I literally offer you $2 for this specific type of data and I give you a very specific contract about how I'll use the data,” he says. “It's more like I offer you some free good, meanwhile, you as the consumer are not sure how this data will be used, and most importantly with what consequences.”

Also in this program, Duke University researchers have found a way to mend a broken heart: special molecules. They injected mice with MicroRNA molecules which turned damaged heart cells into healthy tissue.

About the author

John Moe is the host of Marketplace Tech Report, where he provides an insightful overview of the latest tech news.

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