I've seen this happen in several industries. I'm not sure if there's an official name for it, but I call it the "Netflix effect." Data mining and machine learning work really well for certain things like shopping. This causes people in other industries to assume they can use the same data mining techniques in their industries. I've seen it happen in education as well. There are two fundamental problems I see.
First, big silicon valley companies can afford the best statisticians and computer scientists in the world. They have the resources to train and validate very complex models. Then an industry specific company without those resources says "bring netflix-like data analytics into your industry!" They might offer something simple like linear regression and call it a day. Or even worse, make up a "score" that has no theoretical basis and use a misleading metric like accuracy to promote it.
The cost of misclassification is not the same across all industries. Misclassifying a movie suggestion is way different than deciding how to treat humans.