The importance of consumer data can never be underestimated from a business perspective. It can help identify where a company can grow and improve and highlight any gaps in the service offering. This collection of valuable data has been made harder due to stricter data privacy regulations and a reluctance among consumers to allow their information to be used.
This blog post will discuss how data privacy regulations can affect your business and the challenges that make consumer data collection more difficult.
Data Privacy Regulations: A Brief Overview
Research shows that the majority of consumers (81%) do not want their data to be collected by businesses, stating that the disadvantages greatly outweigh the advantages. The most common negatives are privacy and security risks, as in some cases, personally identifiable information could potentially fall into the hands of cybercriminals.
Data privacy regulations can differ across the world, particularly in the United States, where the laws and guidelines can vary from state to state. Consumers, otherwise known as data subjects, have many rights that must be adhered to if a business wants to stay compliant. These rights are summarized below.
- Upon request, a data subject should also be able to access their data. This can be issued as a digital copy, with an explanation of the means of collection, what information is being processed, and what parties the data is shared with.
- Data subjects have the right to rectify any collected data if it is deemed incorrect or incomplete.
- Data subjects have the right to request that all or part of their data is erased from any records on certain grounds within 30 days of it being collected. Alternatively, they can also request that their data be restricted or suppressed; however, it can still be kept on record.
- Data subjects have the right to restrict the processing of their data.
- Data subjects have the right to data portability, meaning their data can be safely and securely transferred from one electronic system to another at any time without any impact on the data’s usability.
- Data subjects can object to their data being used for marketing, sales, or non-service-related purposes. However, this right does not apply to data used for legal reasons, by official authorities, or for public interests. An objection also cannot be issued if the organization that has collected the data needs it to provide the service for which the subject signed up.
Additional care needs to be taken with data collection due to the number of minors who can access an internet-enabled device. Almost 70% of 12-year-olds now have access to a smartphone, increasing the amount of non-pertinent data that can be collected and needs to be managed accordingly.
What Areas Need Basic Data Protection?
The current data privacy regulations are seen as the bare minimum that should be provided to consumers. These regulations must be updated as new technologies are introduced, and marketing trends change.
Let’s look at four key areas that require basic data protection:
1. Data collection and sharing: Data protection laws ensure people can see what information a business has collected about them. In addition, they can request a copy of the data or for it to be deleted completely.
For example, If you were to request information about your personal data in California under the California Consumer Privacy Act (CCPA), the company in question must disclose all the data they have saved on you.
2. Opt-in consent: As a basic right, each web user should also be asked to “opt in” to share their data if there is a possibility that it may be shared or sold to third parties. This process should be quick and easy, and if the user has not opted in, their data should not be collected.
Creating compliant websites that incorporate opt-in consent forms, SSL security, and other safeguarding best practices requires the skills of an experienced web developer. In most cases, hiring an experienced freelance developer who understands security protocols costs between $60 and $100 an hour.
3. No discrimination: Businesses should not discriminate against users who exercise their rights to deny data collection. Discrimination can include additional charges or excluding these users from discounts or sales.
4. Data minimization: Under regulations, a company should only collect the bare minimum data it needs to provide the service the user has requested.
How Data Privacy Regulations Can Affect Your Business
Now that we have a complete understanding of what rights a user has and how data privacy regulations are imposed, let’s discuss how these regulations can affect your business.
Fewer Data Can Be Collected
An obvious impact of data regulations is that they reduce the amount of data a business can collect. Businesses collect and store data to help develop and improve their company, establishing a better understanding of their customer base and target audience.
Unfortunately, the risk of storing large quantities of data can pose a significant risk in terms of cybercrime, requiring considerable resources to help protect IT systems. As a result, some businesses are choosing only to collect data that is critical to their operations, limiting the chances of a costly data breach.
Third-Party Risk Management
The risk management and compliance of businesses and any third parties involved are very important in the modern business climate. New regulations include many contractual safeguarding procedures, strict data protection, and evidence that compliance has been achieved.
A recent trend has developed where many businesses are trying to keep every operation in-house to avoid third-party data breaches.
New Roles Within the Business
There have also been new data roles created within businesses in recent years, including those of internal privacy managers, chief data officers (CDOs), privacy executives, data protection officers, and data scientists. These employees are tasked with keeping on top of changing regulations and ensuring every measure has been taken to protect data and adhere to consumer rights.
Businesses must impose extensive cybersecurity strategies, requiring in-house specialists or hiring an external cybersecurity firm. Security risks such as ransomware can cost U.S. businesses millions of dollars annually and account for around two-thirds of all breaches that intend to use the data for financial gain.
Educating customers about how they can safely use online services is also a major consideration for many companies, especially businesses that accept cryptocurrency payments. Clients should know that using a VPN and secure payment methods is the best way to reduce the risk of fraud. For example, crypto debit cards allow consumers to spend their crypto as real cash online while ensuring superior security.
Data has become a major talking point in recent years, and businesses are now required to commit extensive resources to adhere to regulations and keep the information they collect safe. Data privacy regulations have limited the amount of consumer data that can be collected and has given data subjects more power regarding how their data is used and stored.
More and more businesses are now choosing to keep all their operations in-house instead of using third parties to help minimize any data risks. New roles have also been created to protect data, while a significant portion of budgets is now being dedicated to cybercrime prevention.