Businesses are not transparent enough about how they use customers' personal data and regulation preventing misuse of such information is weak, research has found — but that doesn't mean consumers will stop sharing their details.
Few respondents to a survey by the Economist Intelligence Unit said they believe their data is well protected by the companies that are demanding ever more private information from them: 57 percent said they considered their personal data was "not secure at all" in the hands of social networks.
At the other end of the scale, banks came out as the most trusted holders of personal information — ahead, perhaps surprisingly, of doctors' surgeries and friends and family.
Nine out of ten respondents said they were worried that their data would be compromised and then used to steal money from them, while eight out of ten were worried their personal data would be used to target marketing campaigns at them.
Michael Harte, CIO of the Commonwealth Bank of Australia, sees this issue growing in importance. "Customers increasingly want more control of their data. They want transparency on where it is, who has it and with whom it will be shared. They want to know what it will be used for," he told the Economist Intelligence Unit.
Consumers also feel unprotected by the authorities: 75 percent said regulation preventing the misuse of personal data is not strong enough. Nellie Kroes, the EC's digital commissioner, told the researchers that these concerns are exacerbated by a lack of knowledge. "It is clear that one of the biggest problems is transparency and complexity," she said.
But the report said that while fears of potential abuse abound, this is not stopping consumers from sharing data: 84 percent of survey respondents belong to social networks, and 34 percent said they are more willing to share basic personal information online than they were three years ago, compared with the 23 percent who said the opposite, according to the survey of 758 internet users.
Companies that earn the right to use consumer data, and do so fairly, could gain a significant competitive edge in the long-term. Building consumer relationships based on trust will help companies gain access to more personal data, and help them to outperform competitors, said Denis McCauley, editorial director at the Economist Intelligence Unit.
Consumer concern about privacy had led some to warn that — if privacy concerns are not addressed — a privacy black hole could emerge and undermine the internet economy, which is based on the permanent and easy availability of personal data that can be harvested, repackaged and resold.
However, according to the Economist Intelligence Unit report only 38 percent of respondents said they had stopped dealing with a company after it suffered a data breach, suggestion that tolerance of such events is greater than some may have thought.