The Ethics of Collecting and Using Consumer Data: What You Need to Know

Author: Janet Borges

What is data ethics? 

Consumer data is the fundamental data for any business and this data is collected by all industries across the world.

When businesses collect consumer data for various business purposes including marketing, sales, operations, administration, finance, etc. The collected data should not be misused. Considering this fact, data ethics is the framework that emphasizes the ethical collecting, storing, using, and deletion of data.

Importance of Data Ethics for Businesses 

Present-day consumer demands are the new-gen trends that are demanding the best possible experience with brands through personalization. Consumers need personalization and enhanced user experience with businesses but are also concerned about how their data is being used.

Increased cyber-attack and misuse or overuse of consumer data have made it difficult for consumers to trust any brand or business. Though all the governments across the world are yet to figure out the special legislations and data protection acts for consumers, GDPR is one of the current frameworks that is guiding businesses in protecting consumer data.

Why Should Businesses Follow Ethical Practices While Collecting Consumer Data?

1. Builds Trust Among Customers

Modern consumers are aware of how their data is being collected and used. Consumers are demanding transparency and accountability in the business processes that are collecting consumer data.

According to the IAAP Survey, 68% of global consumers are concerned about how their data is being used. Hence it is important to gain the trust of the present-day consumer by providing security and accountability to their collected data.

2. GDPR Compliance is Unavoidable  

GDPR is one of the primary regulations that is helping consumers to know how, when, and where their data is being used and processed. GDPR is applied to all the businesses that operate in European Union. Apart from GDPR, individual countries have their own privacy acts but none are yet followed as strictly as GDPR.

Also, even if the businesses operate outside the EU (European Union), GDPR is influencing the Global Data Protection Acts and many countries proactively are forming rules and regulations similar to GDPR.

Hence making your business process GDPR compliant is unavoidable in order to stay ahead of the evolving data protection laws worldwide and also helps in gaining the trust of the consumers.

Know more about GDPR – The Impact of GDPR and Other Privacy Regulations on B2B Marketing Practices

3. To Prevent Penalty and Loss 

As discussed above, businesses are proactively following GDPR, and other countries are introducing regulations that are similar to GDPR.

Businesses are in high need to prove to their customers that they are protecting the data consumer’s data and have to be compliant with GDPR and other related Data Protection Acts. If the rules are violated and the data is used unethically, businesses have to face huge penalties, blacklisting and ultimately losing business.

As discussed, ethical data collection practices are the essential components to run a business process, and gaining customers’ trust. But what are the best ethical practices for collecting consumer data? Let us discuss them below:

Best Data Ethics Practices for Collecting Consumer Data

1. Provide Clear Privacy Policies for Customers

The brands collect customer’s data through various resources and customers are unaware of how their data travels from one resource to the other without any consent.

Hence it is crucial for businesses or brands to assure their customers about how the data is being used. Considering this fact, one of the best ways to collect data ethically is by keeping your customers informed.

Instead of using hidden statements, policies that are complex to understand, provide clear and transparent privacy policies to the customers. This not only increases customer loyalty but also strengthens brand reputation.

2. Follow Opt-in and Opt-out GDPR Rules

Some of the best GDPR rules are voluntarily adopted by various businesses and state authorities.

Opt-in refers to the consent given by customers to use their data. Opt-in particularly refers to the consent given with proof such as signing in to newsletters and submitting forms by ticking the privacy box, a deliberate action that confirms the consent to use the collected data.

Opt-in also means that the consent should be specific, free, and unambiguous. It means customers should be clearly informed about how, where, and when the data will be processed.

Opt-out allows the customers to withdraw the given consent at any time. Also, customers should be given access to their data and they can also choose to not participate in any of the collection or processing of their personal data.

Both opt-in and opt-out are widely implemented and accepted GDPR strategies by businesses that provide the right to data protection, data access, and data consent to their customers.

Additional Read: Personalization and Data Privacy: Finding the Balance

3. Keep your Customers Informed about Changing Policies

Another ethical practice in collecting consumer data is to keep your customers informed about your changing policies.

For instance, if the customers have given you consent to utilize their data only at certain limits and your marketing approach has changed, so changes your strategy of processing the data you have collected. Let your customers know about the new approach of processing data and do not use the same old consent for other marketing practices in which the consent does not count.

4. Buy Data from GDPR-Compliant Vendors

If you as a business stay out of all the data collecting process and buy it from the vendors, purchase the data from GDPR-compliant vendors that helps your business to remain ethical in the process of collecting consumer data.

Cross-verify the data collection process of your vendors and purchase the data that is with completely informed consent. Buying data from vendors that follow malpractices in data collection leads to the ineffectiveness of campaigns, losing consumer trust, and paying huge penalties for the violation of the Data Privacy Acts.

5. Keep your IT Infrastructure Secured and Updated

Businesses carry the ultimate responsibility of protecting their consumer’s data. Outdated and old infrastructure is the loophole to carry out unethical practices like data breaching.

Outdated infrastructure poses security risks that can also lead to inaccurate decision-making processes and affect sales, revenue, and loss of consumer trust.

Hence, it is crucial for all businesses to keep their IT infrastructure updated and equipped with data protection tools.

Conclusion

Unlike traditional consumers, modern-day consumers are aware of how their data is collected and used. It’s a challenge for businesses to remain accountable and transparent in using consumer data. Present-day customers do not hesitate to call out the businesses that are not promising data security.

The effective way to earn customers and build lasting relationships is by providing complete protection to their data. However, with the changing and evolving data protection acts, businesses still have a long way to reach the expectations of consumers.