An Important Issue For Data-Driven Organizations

In case you are not aware, Congress in recent months has been turning up the heat on what it calls “data brokers”, or companies that aggregate, analyze and sell data. In July, Congress sent letters to 9 large firms, including credit agencies Experian and Equifax and Intelius. The concern from lawmakers is data security in a comparatively unregulated industry in which companies sell information on consumers to other companies for profit, which may lead to screening out consumers as undesirable. The potential desire would be a similar scheme to credit reporting regulation that requires disclosure of collected information to consumers and their consent.

Why I am against these efforts

I’ll stay away from my general political philosophy, but I am against this from the standpoint of the marketer and the consumer. The company of today has evolved from one focused on its own products and services to one focused on satisfying the needs of its customers. It requires substantial research and information to deliver value to customers. It results in greater efficiencies and insights, which allow companies to target their highest value customers and design products and services for the under-served. Marketers generate sales and consumers receive value in a free exchange. Both sides are better off. Marketing data allow this to happen.

Now these efforts only raise inquiries and so we are not at a point of actual legislation. Indeed, Congress has more pressing issues to attend to these days. But consumer protection is a popular topic that is often promoted by media as it can provide clear examples of predatory companies and victims. Lawmakers understand this and can use this popularity to enact sweeping legislation. Just look at Dodd-Frank. There are political points to be made on either side of consumer protection. I do believe in data security and the ethical use of data. But I also believe in the law of unintended consequences that is the offspring of any legislation. Ending data collection will score political points but there will be costs to the consumer.

The implications for your business

You may not be leading or working for one of the big data brokers that are in the immediate crosshairs of Congress, but the implications of any legislation could impact businesses of any size. By definition, every business collects and analyzes data on its customers. This means that your own data could fall under the regulatory scope, which will mean greater costs and burdens on your business.

Are you for or against such regulation? Am I on the mark? Off the mark?