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As big companies take liberties with customer data, mistrust abounds

In a new KPMG study, almost a third of executives admit their company “sometimes uses unethical data-collection methods.”

As big companies take liberties with customer data, mistrust abounds
[Source illustration: Victor Metelskiy/iStock]
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Companies are harvesting increasing amounts of personal information from their customers, and customers are growing increasingly concerned about the threat to their privacy. That’s the top line of a new report from consulting firm KPMG, which surveyed 250 business leaders about how they collect, manage, and protect data, and how their customers feel about it.

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The firm concludes that there is a “deep disconnect” between company data practices and consumer privacy expectations. Businesses use personal data for everything from content curation to recommendations to product planning.

Seventy percent of the business leaders KPMG surveyed said their company increased its collection of consumer personal data over the last year. Meanwhile, 86% of the 2,000 consumers surveyed said they’re increasingly concerned about the privacy of their personal data.

KPMG surveyed business leaders and consumers using an online tool from April 30 to May 12, 2021. The business leaders were director-level (or higher) decision makers with involvement in security, privacy, and/or data decisions at companies with more than 1,000 employees.

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Paranoia runs deep

Above all, the survey results paint a picture of withering trust among consumers for the companies they buy from. Forty percent said they don’t trust companies to use their personal data in ethical ways.

The general mistrust has grown so deep that almost half of consumers (47%) KPMG surveyed believe their phones and smart speakers are listening to their conversations (this notion has been discredited by research).

Many respondents were concerned about companies’ ability to protect personal data once they’ve harvested it. Forty-seven percent of consumers say they’re very concerned that companies holding their data could be hacked, and 51% said they feared that their data might be sold.

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“Just ten years ago, you didn’t see nearly as much concern for data collection and privacy rights,” says Colin Pape, founder of Presearch, which makes a blockchain-based search engine. “But now we’re witnessing a shift as people gain a deeper understanding of how companies operate and use their data against them,” he said.

Unethical data grabs

And many businesses aren’t giving consumers reasons to trust them. One of the standout stats from the report says that almost three in ten execs (29%) admit their company “sometimes uses unethical data-collection methods.” And a third of them say consumers ought to be concerned about how their own company is using the data.

In the report, KPMG’s U.S. privacy services leader Orson Lucas points out that that number may even be low, because business leaders are reluctant to report behavior that might make their company look bad.

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States have begun enacting privacy laws that place limits on the amount of data companies can collect.

“While there is no standard definition of unethical consumer data use, it shouldn’t be terribly difficult to identify,” writes Martin Sokalski, KPMG principal advisory, emerging technologies and digital solutions leader, in the report. “If companies would not want their data practices in the headlines—out of fear of what consumers might think—it makes sense to reconsider.”

The truth is, it’s easy for companies to over-collect personal data, with little immediate downside. “As a general rule, many companies do over-collect to some degree,” Lucas says in an email to Fast Company. “But some of the savviest, most mature companies are very thoughtful and intentional about data they collect (and aggregate with other data sets from business partners or other third parties, or other internal data).”

States have begun enacting privacy laws that place limits on the amount of data companies can collect and store. The California Privacy Rights Act, for example, requires businesses to have a clear business reason for collecting the personal data they do, as well as requiring them to notify consumers when they’re doing it.

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Transparency please

Three quarters of the consumers surveyed (76%) said they want more transparency about how their personal data is used, and 40% said they would willingly share their personal data if they knew exactly who would use it and how it would be used. But only 53% of company leaders said their company currently shows customers how their personal data is used.

KPMG says businesses had better start talking to their customers about how they use personal data. Right now, the survey shows, 83% of consumers wouldn’t willingly share their data to help businesses make better products and services.

“The collection and use of consumer data has become so integral to business operations that it is hard to imagine companies will pull back unless forced to do so,” says U.S. KPMG Impact Leader Rob Fisher in the report. “But the longer companies lag behind consumer expectations, the risk of losing access to that data will grow exponentially.”

About the author

Fast Company Senior Writer Mark Sullivan covers emerging technology, politics, artificial intelligence, large tech companies, and misinformation. An award-winning San Francisco-based journalist, Sullivan's work has appeared in Wired, Al Jazeera, CNN, ABC News, CNET, and many others.

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