Back view of businessman managing digital innovation and consumer privacy against backdrop of Federal privacy laws

Consumer Empowerment, Market Innovation, and Privacy Law

In Sep 2019, CEOs representing 51 companies from the Business Roundtable, including Amazon, IBM and Salesforce, signed a letter to congressional leaders pushing for a federal consumer data privacy law. In their words, a comprehensive policy that would ensure “strong, consistent protections for American consumers” and ensure “American companies continue to lead a globally competitive market.”

The current U.S. regulatory landscape is fragmented by the various agencies that have authority and jurisdiction over consumer data. Asking consumers to understand the intricate rules and regulations that govern data depending on their location — or the location of the company they’re engaging with online — is simply not feasible.

As data collection and usage continue to transform the way we interact with brands and businesses, American industry leaders, policymakers, regulators and other stakeholders need to work together to create a balance of industry-led standards and frameworks combined with appropriate regulation that ensures the alignment of innovation and consumer privacy. Currently, there are over 80 countries with national privacy laws, providing insights and lessons for the U.S. to draw upon as we create a model that fits the unique attributes of the world’s technology leader.

How we get there

Data breaches and security threats have made American consumers wary — for good reason. But done right, data collection, sharing and usage can provide dramatic lift for both companies and consumers across industries.

Streaming services make better recommendations as more consumers engage with them, while online retailers can suggest clothing based on items you’ve purchased in the past. And in the financial services industry, empowering consumers to control, access and mine their data will dramatically transform their ability to make more informed financial decisions, while bringing underserved individuals and families into the financial mainstream.

But there’s still room for significant growth in the use of data. Clarifying and, where needed, updating consumer privacy law combined with secure data sharing standards will bolster consumer trust and support customer-centric innovation. It’s also necessary for creating a level playing field in which clear rules help U.S. companies better leverage consumer insights and remain leaders in innovation. In today’s digital era we must move with speed and purpose. But there are several important mile markers on the road to making it a reality:

1. Collaboration

The U.S. data ecosystem is a complex web of interconnected and interdependent private companies, government institutions, data access providers and other stakeholders. All of these players must work together to meet consumer demands and protection while driving innovation.

Some industry-specific organizations do this already, including the Financial Data Exchange (FDX). FDX has brought together a wide range of financial services ecosystem players and consumer representation to “unify the financial industry around a common, interoperable, royalty-free standard for secure and convenient consumer and business access to their financial data.” This is a great example of collaboration to create a platform for innovation that empowers consumers with the ability to leverage their data.

2. Guiding principles

Industry leaders should establish a philosophy that encompasses the core values and goals of data usage. While the FDX serves the financial services sector, its Guiding Principles — access, control, transparency, traceability and security — mirror the characteristics consumers expect from the companies that use their data.

Nine out of ten consumers say they’ll stop purchasing from brands that lack transparency. But 73% of consumers are willing to share more personal data with brands if they’re transparent about how it’s used. At the end of the day, consumers want honesty and clarity from the companies they do business with — and businesses that earn consumer trust tend to fare much better than those that don’t.

3. Policy clarity and modernization

As stated above, industry collaboration is likely to lead to the best outcomes for consumers. However, in a few key areas, regulatory and statutory clarity and modernization is needed to ensure consumers have full access to the data they own and that the appropriate safeguards are in place related to privacy and secure data use.

Independent of one’s views on the Business Roundtable and its proposal, a national approach to consumer data privacy is needed to unify the fractured regulatory system in the U.S. When recommending policy, industry leaders and regulators must keep the end user — the consumer — in mind throughout every stage of the process, and not limit their ability to benefit from the use of their data with overly complex policy or practices implemented under the guise of protection.

Thoughtful #privacy regulations combined with industry-led initiatives will give consumers transparency and control, while enabling businesses to bring new products and services to market. #respectdataClick to Tweet

Ultimately, the collection and use of data should benefit both consumers and the transparent companies that serve them. A thoughtful regulatory framework combined with industry led initiatives will give consumers transparency and control, while enabling businesses to bring new products and services to market without excessive fear around unclear or overbearing regulations.