Modern Data Collection Practices Pose a Threat to Data Privacy

By CIOReview | Tuesday, May 2, 2017

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Data collection and analytics practices have lately been modernized especially with the influx of online marketing and eCommerce. However, this has put big data ethics and privacy at stake. As a result, enterprises are now rethinking the way they analyze and use customer data. According to privacy experts, data analysis results in offering different products or prices to different customers can create problems.

Sometimes, when companies rely too much on data, there are high chances of contextual errors to occur. This can include misinterpretation of data. For instance, a bank uncovered a pattern of customers who were preparing to leave. The bank failed to realize that many of the customers they were about to petition with offers to stay were spouses quietly getting their finances in order before filing for divorce. Contextual errors are just the tip of the iceberg.

A major problem arises when data leads to discrimination. Most privacy advocates accept data gathering and analysis to predict churn or develop customer profiles for marketing up to a limit. Data analytics can be used to induce customers to spend more. But when businesses start using personally identifiable customer data, such as names, addresses to change pricing offers or the availability of services, they need to be more transparent and offer customers the option to opt out. Else, issues of fairness can pop. It can also be used to justify denying mortgages or insurance policies to people. When customers are unaware of what kind of data is being used to personalize their experience, they are at a fundamental disadvantage.

Most companies and online services collecting customer data require people to affirm they agree to a list of terms and conditions, which includes a privacy policy. But that approach does not always provide a meaningful choice to customers in terms of how their data is used. Also, customers don’t necessarily read all the terms mentioned in the privacy policy but have to accept them for the sake of proceeding ahead. In case, a customer has a problem with the terms or conditions, he cannot negotiate them. This is why he is forced to accept them. In many cases, users are forced to agree on the terms and services. For example, The Federal Trade Commission has said companies can first issue earnings reports and other information vital to investors via Twitter.

Making Sense of Big Data

On the one hand, data collection can risk privacy, while on the other; the big data movement has a number of advantages. Alongside making businesses more efficient, big data is also responsible for transforming some of the sectors like healthcare and law. Economically, data collection has open doors to new ways of economic growth. Data is the currency of the digital age, economic growth and innovation are possible only with access to data. In today’s scenario, data privacy is not a major concern as users willingly surrender data when asked for. And they do so, because they know they will receive something of value in return. It can be a free news article or access to an online platform that lets them make contact with other people around the world. As long as people feel they are receiving adequate value for the data they surrender, big data analytics and privacy practices are not going to be affected. Online privacy and big data ethics are not major concerns as of now. In the present times, privacy laws that simply require more transparency are likely to be ineffective.