Consumer Data Privacy and Future Readiness: Developing a Meaningful Growth Outlook

To get a sense of how consumers feel about the privacy of their personal data, a McKinsey survey from 2020 offers some telling insights:

• Recent high-profile consumer-data breaches have eroded consumers’ trust in organizations
• 87 percent of consumers will not do business with a company that has weak security practices
• 71 percent will sever their relationship with a company that gave away their sensitive data without permission
• 50 percent trust companies that forthrightly disclose breach incidents to the public

These findings show that consumers take their data privacy seriously. The findings also show that to earn and retain consumer trust, companies must understand data privacy laws and implement robust measures to protect consumer data.

What Is Consumer Data Privacy?

Consumer data privacy refers to how companies collect, handle, and protect sensitive customer information. If this data falls into the wrong hands, the affected individual may become the target of identity theft or fraud. These incidents can cause embarrassment or humiliation, damage a person’s mental health, affect their career prospects, or strain personal relationships.

Many consumers are aware of these risks to their personal data; that’s why they want to keep it private. It’s also why they are wary of sharing their personal information with organizations, unless they know that the information will be protected and not used for illegal or unethical purposes.

Why Consumer Data Privacy Matters to Businesses

The McKinsey survey found that most consumers don’t trust companies to protect their data and privacy, and for good reason: the increasing frequency of data breaches. As recently as 2021, there were 1,864 documented data breaches, 68 percent more than 2020.

Naturally, consumers are worried – and their worry, in turn, worries organizations. Companies collect many types of data from consumers for important business purposes, such as:

• To understand the market
• To make better business decisions
• To refine marketing campaigns
• To create customized offerings

But when consumers don’t trust companies, they are unwilling to share their data. Without consumer information, companies find that innovation slows down, research is hindered, and their competitive position is weakened.

As data becomes increasingly valuable and consumers become increasingly picky about sharing it, organizations have no choice but to implement strong controls that will protect consumer data from breaches, maintain consumer privacy, and allow the company to remain compliant with data privacy laws.

Controls are also important for financial reasons. According to IBM, the average cost of a data breach has increased to $4.35 million in 2022. The wisest way to avoid this cost is to prevent breaches in the first place. And to avoid breaches, companies must:

1. Acknowledge the need for consumer data privacy
2. Be aware of the data privacy laws that apply to their industry or country
3. Implement robust data privacy controls

Data Privacy Laws Around the World

Governments worldwide have implemented data privacy laws to safeguard consumer data. While there are differences in how these laws are implemented, generally they are meant to regulate:

• Organizations’ data collection practices
• What kind of sensitive information businesses can legally collect
• What businesses must do to protect the data from unauthorized or malicious entities
• How organizations should respond to consumer requests for data updates, deletions, etc.
• Consumer rights regarding their own information

The EU’s General Data Protection Regulation (GDPR) is considered the “gold standard” in consumer data privacy laws. It applies to all companies collecting the personal data of EU residents through any channel, including social media.

Other countries have also passed federal laws around data privacy, including:

• Singapore: Personal Data Protection Act (PDPA)
• Brazil: General Law for the Protection of Personal Data (LGPD)
• South Africa: Protection of Personal Information Act (POPIA)
• Philippines: Data Privacy Act of 2012
• Australia: The Privacy Act of 1988
• New Zealand: The Privacy Act of 2020

The United States does not have a single data privacy law at the federal level. Instead, multiple state laws or industry-specific laws regulate how organizations can collect, process, use, and store consumer data. These include:

• Health Insurance Portability and Accounting Act (HIPAA)
• California Consumer Privacy Act (CCPA)
• Colorado Privacy Act (CPA)
• Children’s Online Privacy Protection Act (COPPA)
• Virginia Consumer Data Protection Act (VCDPA)
• Gramm Leach Bliley Act (GLBA)
• California Privacy Rights Act (CPRA)

In addition to complying with government regulations, some organizations and service providers must adhere to industry-mandated regulations. One example is the Payment Card Industry Data Security Standard (PCI DSS), meant to protect credit card data.

Best Practices to Maintain Consumer Data Privacy

Organizations must implement strong processes and controls to maintain consumer data privacy. This “data protection family tree” could include:

• Strengthening user login processes by mandating the use of strong passwords
• Implementing biometric authentication to strengthen user identification and authentication
• Encrypting all electronically transmitted user data
• Providing opt-out provisions in email communication and other services
• Creating and maintaining “do not call” (DNC) lists
• Implementing digital signatures to increase the security and integrity of online transactions
• Limiting access to sensitive consumer data on a need-to-know basis
• Scanning all data systems for vulnerabilities and quickly patching discovered vulnerabilities

Companies that deal with consumer data should also install security tools such as firewalls, intrusion detection systems (IDS), and endpoint detection and response (EDR) systems. It’s useful to undertake regular data backups and deploy a robust data recovery plan. Both these elements can minimize business disruptions when a breach happens.

Companies should also implement an incident response (IR) plan. This plan can help security teams to respond to a breach attempt quickly and contain its impact before the breach results in massive data losses.

Give Teeth to Your Consumer Data Privacy Program with ZenGRC

Your consumer data privacy program can always benefit from automated workflows, contextual insights, and expert-provided guidance. Get all these benefits from a single, centralized solution: ZenGRC.

ZenGRC will help you overcome your data protection challenges, conduct risk assessments, and achieve compliance with applicable privacy regulations. It will also show you a real-time view of risk so you can make smart decisions to mitigate risk and reliably protect consumer data.

Get a demo of the ZenGRC Platform today!