For businesses, maintaining data privacy and protecting consumer information is very important for day-to-day operations. With many laws and regulations to protect data privacy, companies are expected to safeguard sensitive information effectively. However, despite these numerous data privacy legislation’s, consumers’ privacy is still regularly getting invaded or compromised by organizations.
In this article, we will look at why data privacy is important and how it benefits businesses beyond meeting with compliance requirements.
Laws and Regulations
Data privacy or information privacy is primarily concerned with the proper handling of data – consent, notice, protection, and regulatory obligations. Before we move on, let’s first have a glimpse of several international regulations that ensure data privacy.
EU Data Privacy Laws
The EU’s General Data Privacy Regulation (GDPR) gives European consumers certain rights over their data while also placing security obligations on companies holding their data. A few of requirements that should be achieved to maintain compliance with the GDPR include the following:
- Prohibition of data collection without explicit opt-in consent from users
- Users should have the right to request data from companies
- Users should have the right to have their data deleted
In the US, data privacy is regulated under many further laws. Some of these are applicable only at the state level, while some apply to the whole country. Examples of these regulations include the Health Insurance Portability and Accountability Act (HIPAA). This ensures that consumer’s medical data is protected and sets limits on who can look at and receive your health information.
The Gramm-Leach-Bliley Act (GLBA), on the other hand, requires financial institutions to explain their information-sharing practices to their customers and to safeguard sensitive data. Meanwhile, the California Consumer Privacy Act (CCPA) regulates data privacy on businesses operating in the state of California. Many states in the US have laws similar to the CCPA.
These legislations penalize organizations that do not implement privacy protection with huge fines amounting up to tens of millions of dollars and up to 20-year penalties for non-compliance. Businesses also risk losing partners by not complying with their contractual requirements for privacy protections.
Benefits of Data Protection in Increasing Business Value
- It prevents breaches
One principle common to many international data privacy principles and regulations is the requirement to implement strong security measures and controls to protect sensitive data. Following such provision will reduce the number of cybersecurity incidents resulting in data breaches—as well as the losses that are associated with it. This means your business will not have to deal with lawsuits, fines, bad press and reputational damage as an aftereffect of data breaches. A study consisting of more than a hundred businesses revealed that data breaches cause an average of 5 percent plunge in a company’s share value.
- It helps maintain customer trust and build loyalty
Businesses that do not implement strict data privacy measures to protect consumer data are at bigger risk of getting breached. This will, in turn, result in fewer customers due to dwindling customer trust. A study revealed that 65 percent of consumers whose information were stolen lost trust in the breached organization. Additionally, 25 percent switched their business elsewhere. On the other hand, a separate study revealed that 20 percent of consumers who had their personal data stolen at least once said they would not patronize businesses that previously experienced a breach.
- It improves brand value
Data breaches are very damaging to a brand’s reputation. It could hound your company for months, or even years, which spells a lot of trouble in very competitive business industries. Similarly, organizations that are explicitly showing customers how they value and protect their user’s privacy can build emotional connections with their customers. This improves brand value and allows organizations to strengthen and grow their business.
- It gives brands a competitive advantage
Nowadays, the general public is becoming much more aware of their privacy rights on the web. Expectations towards personal data protection are rising as users want control over how their data is collected, used, analyzed, and shared. A recent Pew survey revealed that 90 percent of Americans said they wanted to control what types of information about them are collected. On the other hand, at least 25 percent of internet-using households in the US would rather not do actions online because of concerns about online privacy and security. Consumers more prefer businesses that show care about user data protection and implement secure privacy protections over their competitors who do not prioritize data privacy.