Why Data Ethics are Important for Your Business
Data ethics are a hot topic among businesses large and small because the massive amounts of data we now collect can reveal so much about our customers, their habits, and their buying behaviors that we must navigate thorny issues of privacy and bias as we try to glean insight from that data.
As with traditional ethics, data ethics exist to protect individuals, groups, and society. But where ethics have historically focused on morality and an individual’s behavior, data ethics focus on technology, its potential and its misuse.
See our AZBEE award-winning article: AI Suffers from Bias—But It Doesn’t Have To
What is Data Ethics?
Data ethics are the guidelines that govern how we handle data for customers and society as a whole. These are best practices that should be followed by every business to ensure that privacy, security, and transparency standards are met.
At a time when even the largest tech companies are running into controversy over data algorithms, how we handle data touches on issues of regulatory compliance, data privacy, and fairness. How we handle data has the potential to affect the reputation of our companies and ourselves.
Why Should Companies Care about Data Ethics?
Because today’s consumers are digital natives, they expect your company to be just as digitally savvy as they are. If you collect and use their data in unethical or manipulative ways, they’ll write you off when they find out.
Virtually every organization that processes data—every bank, insurance company, retailer, health care provider, social media company and government agency—has a stake in how its customers’ personal information is collected and used. And if people don’t trust an organization to respect their privacy and personal data, they can do business elsewhere.
Bad press is bad press. There’s no way around it: If you come under fire for mishandling customer data, people will talk about it online and elsewhere, which means your brand reputation could suffer even more than whatever penalty comes along with violating data laws.
In today’s highly competitive marketplaces, companies must work hard to earn and maintain their customer’s trust. That means being honest about collecting and using data and taking steps to protect your customers’ sensitive information from unauthorized access or misuse. It also means giving them control over their own data.
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What Are the Important Aspects of Data Ethics?
When you collect and store data, it becomes your responsibility. This is why companies have a legal obligation to protect user information. There are also business benefits to keeping your customer’s trust; customers who think a company can be trusted will be more likely to return, buy more, and recommend it to others.
Data ethics matter so much—they establish a baseline of trust between you and your users. The most important aspects of data ethics are ownership, transparency, consent, privacy, compliance, and openness. These components define what good data ethics look like in practice.
Ownership
The General Data Protection Regulation (GDPR) essentially says that individuals own their data. As an entrepreneur or manager, it is crucial to keep track of these rules and regulations. A simple way to ensure compliance with these regulations is by implementing an ethical approach when collecting data from users, particularly through websites or mobile apps.
Transparency
Consumers want full transparency when they share their personal information with businesses.
Transparency should always be at the forefront of our minds when designing any type of product. Consumers must know exactly how their data will be used and which third parties might see it. They need to know precisely how long that information is kept, what security measures are being taken, etc.
Consent
Digital consumer rights are not only applicable offline but also online. If a company wishes to collect and store user data, it must ensure they obtain consent from users before doing so. There needs to be an opt-in element in place; you can’t just assume someone wants your service because they use your product or visit your site. You have to get permission from them first—this is referred to as informed consent.
Privacy
Privacy is about making sure your customers understand how their personal information will be used. This includes telling them who has access to their data, where it’s stored, how long it’s stored for, and what security measures are in place to protect it. The most important thing here is transparency; there shouldn’t be any hidden terms or clauses that could potentially violate a customer’s trust.
Compliance
This refers to ensuring your business complies with all relevant laws and regulations regarding data protection. In other words, you must ensure all processes comply with GDPR rules and regulations, as well as other applicable laws like COPPA (Children Online Privacy Protection Act ), FERPA (Family Educational Rights and Privacy Act), HIPAA (Health Insurance Portability and Accountability Act), GLBA (Gramm–Leach–Bliley Act), etc.
Openness
Openness regarding data ethics means giving control back to users. Many people claim that a key component of ethical behavior is empowerment, specifically giving control back to those whose data is being collected. Just as providing clear ownership, transparency, and consent will build trust between you and your customers, empowering them by allowing them full control over their personal information builds even more credibility.
Also read: Why GDPR Must Be an Integral Part of Your GRC Framework
A Framework for Applying Data Ethics
Today’s companies, government agencies and individuals face complex ethical issues in data collection, analysis and disclosure. What standards and principles should guide entities seeking to collect personal data? How can they be applied when addressing specific use cases?
It is important to understand what constitutes data ethics to answer these questions. There are two main components that make up data ethics:
- The underlying philosophical or theoretical foundation (or frameworks) used to determine right and wrong behavior
- The actual business practices that follow from those foundations
Enterprises can apply data ethics using frameworks such as fair information practices (FIP), privacy by design (PbD), fairness, transparency & accountability (FT&A), trust framework for Big Data analytics, etc. These models are not mutually exclusive but rather complement each other. For example, FIP could be considered a foundational component, while PbD guides how to operationalize those foundational principles into day-to-day activities.
This framework is designed to help you think through three core aspects of data ethics:
Personal data collection
Enterprises must consider whether or not it is appropriate to collect personal information about their customers. If so, what types of information should be collected? When does customer consent become necessary? Do you need explicit consent, or does implied consent suffice under certain circumstances? What steps should you take to ensure that your customers understand how and why they’re being asked for their information? And finally, how do you determine when it’s no longer necessary to retain that data?
Data use and disclosure
Once an enterprise has obtained its customer’s personal data, how will it use and disclose that information? When is it appropriate to share that data with third parties? Are there limits on who can access or view a customer’s personal information within your organization? What about when you transfer that data to a third-party service provider (e.g., cloud storage)? Should you anonymize or pseudonymize your customers’ data before sharing it with others? And finally, what steps should be taken to ensure that your customers understand how their data is being used?
Access and transparency
Finally, we must consider whether or not our enterprises have provided reasonable access to their customers so they can learn more about how we are using their personal data. If so, do our entities offer sufficient transparency such that people can meaningfully exercise those rights? Does our privacy policy contain clear and concise language that allows consumers to understand what we collect from them and why? Do we provide opportunities for people to delete certain pieces of information from our systems if they want to erase them from our databases permanently?
These three areas (Personal Data Collection, Use & Disclosure, and Access & Transparency) are essential components of any data ethics framework. They also serve as a good starting point for your enterprise to begin thinking through these issues.
Best Data Ethics Practices
These are the principles that should guide your development and practice of data ethics.
Establish clear policies and procedures
You need written policies and procedures for protecting consumer data, including what types of consumer information you collect, how long you keep it, who has access to it, and what steps will be taken when there’s a breach of security or unauthorized release of consumer information.
Get employee buy-in
Developing and implementing your policies requires involvement from all levels of management and frontline employees. This may seem like a big job, but having a formal process for reviewing data protection policies and updating them regularly helps keep everyone on board.
Make sure your IT systems are secure
There are many ways to safeguard your computer systems against malware and hacking attempts. Hire a reputable computer security firm to regularly audit your systems, follow their recommendations, and ensure employees know how to spot potential threats.
Monitor activity closely
Make sure you know where personal data is stored, whether online or offline, and take steps to prevent accidental loss or theft of that information.
Encourage consumers to provide informed consent
When obtaining consent from consumers, clearly explain why you’re collecting their personal information and what you plan to do with it. Communicate any risks associated with providing that information and offer choices (such as opting out) whenever possible.
Be transparent about changes in policy
If your company changes its data collection or usage policies, inform customers immediately so they can make informed decisions about doing business with you going forward.
Maintaining Customers’ Trust
As you implement a data ethics program within your organization, it’s important to remember that there is no one-size-fits-all approach. What works well for one enterprise may not be suitable for another. This is why it’s critical to determine what works best in your specific context and then develop an appropriate plan of action based on those findings. The trust of your customers depends on it.
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