3 Pain Points Regarding Data Privacy

In an ideal world, data privacy regulations would be uniform.

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In an ideal world, data privacy regulations would be uniform. However, today there are wildly different consumer protection laws between states, which has created an unlevel playing field for local business owners and caused confusion for marketers. Data privacy is good news for consumers, but the inconsistent implementation is bad business for small companies facing the runaway costs of compliance across multiple jurisdictions.

The introduction of the European General Data Protection Regulation (GDPA) in 2016 changed online marketing for businesses forever. As one of the most widespread implementations of consumer data privacy in the history of internet advertising, it set the table for incremental acts worldwide.

In the U.S., the California Consumer Privacy Act (CCPA) came into law in 2018 and has since become the model for other states to follow, each with its own variations. Consequently, it has become too costly for small businesses to remain in compliance with the diversity of rules and expectations.

We need a federal set of regulations that will override state laws to provide certainty and consistency for all companies that host and leverage private data, not just for their benefit but to protect consumers.

1. Absence of Federal Regulations

Colorado, Utah and Virginia have followed California's enacting comprehensive privacy laws, and an additional 21 states have consumer privacy legislation pending. Unfortunately, there is no immediate remedy to the proliferation of legislation for smaller companies.

For a set of federal rules to override state laws, they first have to be enacted, which won't happen until over half the states have reached a consistent position. Typically, it is only then that local legislators can lobby for federal regulations.

In the meantime, huge companies such as Amazon, Google and Facebook can leverage the consumer data they collect because they have an army of attorneys and compliance officers making sure they don't run afoul of the patchwork of state rules. Until the Federal Government takes progressive steps, these giant players can also define the entire industry as they make wholesale changes to privacy-compliant technology like the "cookie."

For smaller businesses, it can be very stressful attempting to leverage data without exposing themselves to the risk of paying huge penalties if they breach the law. California imposes a fine of up to $7,500 for each intentional violation of the privacy law and $2,500 for each unintentional violation.

Add that to the estimated $100,000 companies face in implementing data privacy regulations in the state and the bills accumulate rapidly.

2. Lack of Consumer Control

In the absence of uniform data privacy laws across the country, the challenge for marketers is to align around what is good for the consumer and what allows them to do their jobs. It is still an advertising marketplace, after all.

We can agree that there's a point where you probably don't need to know any more about the consumer to get them interested in a product or service. That alignment requires privacy laws to rein in the power of specific content, data collection and algorithms where platforms unwittingly 'reprogram' users.

To maximize engagement, powerful platforms, publishers and social media companies deploy algorithms that generate and amplify noise around the content they know keeps a consumer active on their site. The negative side-effects of spending that much time using these platforms can completely sway public opinion against collecting and leveraging data.

3. Self-regulation Through Policy

The potential of any public backlash highlights the two dimensions of data privacy: allowing the consumer to have some control over their information and protecting themselves from some of the adverse consequences of data-driven advertising that seek to hook their attention.

The wiser marketers are open-minded about protecting users' data from misuse while balancing their need to market products and services. They understand that certain privacy regulations are fundamental to an ethical society – protections against identity theft, financial fraud and misinformation used to drive public opinion.

Rather than wait for uniform federal regulation, businesses that codify the ethical use of data in their policies may use their transparency as a marketable asset. There have been some positive developments in this space, with the likes of Apple now giving new iPhone users the option of anonymized email.

Make Ethics the Common Ground

Consistent privacy laws can end the power struggle between consumer protection and businesses' need to leverage data for repeat purchases and to find new consumers. Marketers who take an ethical approach will be able to adapt more easily to the ever-changing data privacy landscape.

Most can agree that we should be protecting ourselves, our families and our children from the overuse of commercialized data. Regulations that clearly state what is and is not allowed would safeguard consumers and allow both small and large companies to operate on a level playing field — creating an ethical and successful marketplace.

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