It turned out the app could also be used by the Dutch tax authority to pinpoint these roadside vendors, who in turn would run the risk of having to pay fines and extra taxes.
Upon finalizing the app, it turned out we had missed to see an important and unwanted ‘by-product’ of this service. We unintentionally had designed an app that could enable the Dutch Tax Authority to locate vendors and to check if they were required to charge VAT. If so, the owner of a booth may needed to pay extra taxes because of the income they would have generated from selling groceries. As the Dutch Tax law states, any individual that offers goods or services while creating publicity around that offering, is considered to be running a business and is therefore obliged to report and pay VAT.
User research had shown that most vendors just sold their surplus groceries and would not make a lot of money on it. Neither had they the intention of starting and maintaining a business. If the Tax Authority would sign up with our service and pinpoint the vendors’ location, it would be able to see who was living at that address and require the individual grocery seller to report and pay VAT.
This would at least provide these vendors with a lot of extra paperwork and would probably discourage them from selling their groceries via roadside booths altogether. By enabling other smartphone users to provide location based data on these vendors, we had unintentionally put these vendors in a vulnerable position. In the end, it was their choice to charge or not to charge VAT, but we had indirectly enabled the Dutch tax authority to easily check out anyone whose address was geolocated near a roadside vendor booth.
We had created an easy-to-use service that could gather a lot of personal data on individuals that had not actively participated in sharing this data and we offered this data more or less publicly. Although we had the best intentions (to create a user friendly service enabling people to buy local home grown food), this data could be used in ways that could be harmful for the people involved. We had unintentionally violated these people’s privacy only because they sold some home grown groceries while the consequences could have been quite unpleasant.