Data privacy is a touchy subject. There’s no denying the fact that we live in a digital world and data is a hot commodity. How we share and manage customer data can make or break a business. That’s where data privacy insurance comes into play.
A little background: Facebook and Cambridge Analytica
Let’s take a look at the current data privacy issues plaguing Facebook right now. During the 2016 presidential election, a firm called Cambridge Analytica used Facebook to mine the data of 87 million Americans for Donald Trump’s presidential campaign. The company created various quizzes, which required the users to grant Cambridge Analytica access to their personal data – name, age, location, etc. This practice was nothing new. In fact, businesses have been mining Facebook user data for marketing purposes almost since its inception. And Barack Obama’s 2012 presidential campaign used similar data mining tactics.
What makes the Cambridge Analytica story stand out is that the fact that the firm was able to exploit a loophole on Facebook that not only granted it access to data of quiz respondents but to the data of all their friends as well. Moreover, while Facebook prohibited the selling of data mined from its platform, Cambridge Analytica allegedly ignored those rules and sold the data it collected. Hence the scandal.
While there is little evidence to suggest the data collected from Facebook did anything to tip the scales in Trump’s favor, it did shine a light on Facebook’s relatively unknown business practices. Here’s the bottom line: Facebook is a data company and it makes money selling that data. Period. But a lax policy is what landed Facebook in such hot water. In order to avoid finding your business in a similar situation, you need two things: a thorough data management policy and data privacy insurance.
Data privacy insurance
Data becomes more and more valuable, especially for marketing purposes, the more of it we will collect. The more a consumer trusts us to protect their data, the higher the odds they will freely hand it over. When a company misuses customer data, as Facebook did, it opens itself up to a glut of legal liability.
That’s where data privacy insurance, also known as cyber-liability insurance, comes into play. Cyber liability is the risk a company takes on when it collects and stores employee and customer data, whether virtually or physically.
If that sensitive data, especially personally identifiable data like social security numbers, were to slip into the wrong hands, it can wreak havoc even of the smallest companies.
Any business that collects and/or stores sensitive employee or customer data needs a data privacy insurance policy. For more information, contact a Brashears Insurance associate today at (805) 564-7645.