Retailers & Banks Brace for the 'Right to be Forgotten'

Pablo Valerio, International Business & IT Consultant | 3/26/2012 | 29 comments

Pablo Valerio
"A 'right to be forgotten' will help people better manage data-protection risks online. When they no longer want their data to be processed and there are no legitimate grounds for retaining it, the data will be deleted." This is the first statement on the European Commission information paper about the EU data protection reform, being discussed now in the European parliament and the EU council.

If enacted, European citizens will have a legal framework to stop companies tracking their shopping habits, their movements on the Web, their location on cellphones, and any other type of data processing that is not required to provide the service the customers require.

According to the EU commission, 90 percent of Europeans want the same data protection across the EU, and 43 percent of Internet users say they have been asked for more personal information than necessary.

But not everyone is happy about the new rules. Social networking sites and marketing companies, major European banks, insurance companies, and retailers are claiming that the new rules will hurt their business, since they could not exchange information freely without consent.

And they will require explicit consent. Under the new rules, they can’t just include consent in a standard contract and use it for everything else; every request to process individual data needs to be explained separately, and the customer will have the choice to opt-in.

For example, a cellular provider can’t force a customer to opt-in for the storage of their location information, nor can a credit card company process the information about their customers' shopping habits and sell it to a marketing firm.

And there is the “right to be forgotten.” Anyone in the EU will be able to ask any service provider or company for complete details of the data they hold about them, and request the complete erasure of the information, except the one that companies need to keep required by law.

One of the key provisions of the law is that companies will only have to deal with a single national protection authority in the EU country where they have their corporate headquarters. A Dutch bank needs to deal with the data protection authority in the Netherlands, not with every country’s data agency where they do business in the EU.

Also, companies without legal presence in the EU need to comply with the rules, “if they offer goods or services in the EU or monitor the online behaviour of citizens.”

The EU commission claims that “individuals can be confident that they can go online and take advantage of new technologies, regardless of where they come from, whether it’s shopping for a better deal, or sharing information with friends around the globe... This will help stimulate the internal market, boots growth, create jobs and foster innovation.”

With 70 percent of Europeans "concerned that their personal data held by companies may be used for a purpose other than that for which it was collected," the new regulations will help people feel more confident online, but will also mean a change of habit for commercial companies, especially banks, marketing firms, and retailers, in the way they take advantage of the information they have about their customers.

CIOs will need to be prepared to make up for the lost revenue; install new ways of getting permissions from customers; delete requested records in a cost-effective, non-labor intensive way; and otherwise deal with a law that changes the very foundations of the way they operate. Will you be ready?

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Joe Stanganelli   Retailers & Banks Brace for the 'Right to be Forgotten'   4/15/2012 3:20:57 AM
Re: The iTunes Method or Opt out
Excellent point, Pablo.  Any time gov't wants to pass a law regulating or restricting business in any way, the lobbyists cry loudly.

I'm certainly no communitarian, but one has to take the source into consideration when weighing the quality of arguments and determining whether or not to take statements of "fact" at face value.
Joe Stanganelli   Retailers & Banks Brace for the 'Right to be Forgotten'   4/15/2012 3:17:41 AM
Re: The iTunes Method
Hi, Dave.

Re: "I can't really see how this can be done without really destroying the economy tech companies are built on."

A significant economic cost, sure, but "destroying" seems a bit maudlin.   Retailers and banks survived and thrived long before our "drop your pants and give up your privacy" age.  If every company is subject to these laws in the applicable jurisdictions, it's hard to see how this would put any particular business at a serious disadvantage.  What's more, based on Pablo's description, it's hard to see how this is unduly burdensome on the compliance side of things.

Joe Stanganelli   Retailers & Banks Brace for the 'Right to be Forgotten'   4/15/2012 3:12:38 AM
Re: The iTunes Method
I haven't read it as of yet, Pablo, but that sounds terrific for consumers!  Thanks for sharing those details with us.
Pablo Valerio   Retailers & Banks Brace for the 'Right to be Forgotten'   3/30/2012 10:28:45 AM
Re: no more big brother
@fbpmt. That is not possible. According with the new rules explicit agreement has to be given for each time they want to process information, and has to be separate from the genaral agreements.

There is special concern about mobile devices, in that case the user needs to opt-in for any kind of tracking, and the service can't be denied if the user decides not to do so.
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fbpmt   Retailers & Banks Brace for the 'Right to be Forgotten'   3/29/2012 9:14:49 PM
Re: no more big brother
What about sneaking in the legal right to obtain that info via the update agreement too long and tiny fonts and anything else so we do not read it and blindly accept whatever legalities they want?
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kstaron   Retailers & Banks Brace for the 'Right to be Forgotten'   3/29/2012 2:59:11 PM
no more big brother
Some companies seem to favor the "big Brother" I'll keep tabs on everything you do mentality. This is a great way for customers to be able to control their information. If they still want the data, they provide incentives for it. If this becomes normal, how will it affect your data collection?
DBK   Retailers & Banks Brace for the 'Right to be Forgotten'   3/27/2012 4:14:57 PM
Re: The iTunes Method or Opt out
A side note on the brick and mortar vs click and order.  As products get so highly commoditized it gets harder and harder for brick and mortar companies to stay in business and be profitable.  The larger volume establishments with lower cost of overhead get stronger and the local retailers get crushed.  In addition to our desire to protect our data I also hope we protect our local vendors.  Of course we exercise our vote on who will win when we buy online.
DBK   Retailers & Banks Brace for the 'Right to be Forgotten'   3/27/2012 4:11:45 PM
Re: The iTunes Method or Opt out
Pablo - You have better insight into this condition than I do.  I appreciate your point of view regarding the brick and mortar retailers who have expertise on capturing your data.  One additional observation is that the two organizations you mentioned also have an on-line environment.  So my question would be what drivers that data capture?  My guess would be the online experience and then the pull through this the brick and mortar. 
Pablo Valerio   Retailers & Banks Brace for the 'Right to be Forgotten'   3/27/2012 3:58:29 PM
Re: The iTunes Method or Opt out
@Dave

I think the Impact Assessment summary from the Comission can answer some of the questions about that.  

"The envisaged actions are proportionate as they are within the scope of the Union competences as defined by the Treaties and are necessary to ensure uniformity of application of EU legislation, ensuring effective and equal protection of individuals' fundamental rights. Action at EU level is essential to continue ensuring credibility and a high level of data protection in a globalised world, while maintaining the free flow of data. The proper functioning of the internal market requires that the provisions ensure a level playing field for economic operators."
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Pablo Valerio   Retailers & Banks Brace for the 'Right to be Forgotten'   3/27/2012 3:22:42 PM
Re: The iTunes Method or Opt out
In the brick and mortar experience do they also capture my data and repurpose it?  Maybe but I don't think so, not like the on line analytics.

@DBK, actually they do.. if you use a loyalty card or the same credit card on your purchases. Target is an expert in creating customer's profiles, so B&N and other reatilers.
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