Privacy and Business:. Go Beyond Compliance to Competitive Advantage. Ann Cavoukian, Ph.D. Information & Privacy Commissioner/Ontario. Rotman School of Management Executive MBA Program March 18, 2005. Growth of Privacy as a Global Issue. (EU Directive on Data Protection)
Go Beyond Compliance to Competitive Advantage
Ann Cavoukian, Ph.D.
Information & Privacy Commissioner/Ontario
Rotman School of Management
Executive MBA Program
March 18, 2005
(EU Directive on Data Protection)
Exponential growth of personal data collected, transmitted and exploited.
Convergence of growth in bandwidth, sensors, data storage and computing power.
Consumer Backlash; heightened consumer expectationsImpetusfor Change
Served to expand powers of surveillance on the part of the state, and reduce judicial oversight.And then came 9/11
It’s business as usual: introduced.
Clear distinction between public safety and business issues – make no mistake
NO reduction in consumer expectations
Increased value of trusted relationshipsThe Aftermath
Increased trust in government has not been paralleled by increased trust in business handling of personal information
Privacy On and Off the Internet: What Consumers Want
Harris Interactive, November 2001
Dr. Alan WestinConsumer Attitudes
In the post-9/11 world: Mood”
Consumers either as concerned or more concerned about online privacy
Concerns focused on the business use of personal information, not new government surveillance powers
If consumers have confidence in a company’s privacy practices, consumers are more likely to:
Increase volume of business with company…….... 91%
Increase frequency of business……………….…... 90%
Stop doing business with company if PI misused…83%
Harris/Westin Poll, Nov. 2001 & Feb. 2002Importance of Consumer Trust
Freedom of choice; control; informational self-determination
Personal control over the collection, use and disclosure of any recorded information about an identifiable individualInformation Privacy Defined
Security Mood” PrivacyWhat Privacy is Not
Privacy; Data Protection
Fair Information Practices
Organizational control of information through information systemsPrivacy and Security: The Difference
OECD Mood”Guidelines on the Protection of Privacy and Transborder Flows of Personal Data
EU Directive on Data Protection
CSA Model Code for the Protection of Personal Information
Canada Personal Information Protection and Electronic Documents Act (PIPEDA)Fair Information Practices: A Brief History
Limiting Use, Disclosure, Retention
AccuracySummary of Fair Information Practices
1. Accountability Mood”
for personal information designate an individual(s) accountable for compliance
2. Identifying Purposes
purpose of collection must be clear at or before time of collection
individual has to give consent to collection, use, disclosure of personal informationThe Ten Commandments
4. Limiting Collection Mood”
collect only information required for the identified purpose; information shall be collected by fair and lawful means
5. Limiting Use, Disclosure, Retention
consent of individual required for all other purposes
keep information as accurate and up-to-date as necessary for identified purpose
protection and security required, appropriate to the sensitivity of the informationThe Ten Commandments
8. Openness Mood”
policies and other information about the management of personal information should be readily available.
9. Individual Access
upon request, an individual shall be informed of the existence, use and disclosure of his or her personal information and be given access to that information, be able to challenge its accuracy and completeness and have it amended as appropriate.
10. Challenging Compliance
ability to challenge all practices in accord with the above principles to the accountable body in the organization.The Ten Commandments
Privacy Act (federal) Mood”
Access to Information Act, (federal).
Freedom of Information and Protection of Privacy Act (Ontario).
Municipal Freedom of Information and Protection of Privacy Act, (Ontario).Public Sector Privacy Laws
As of January 1, 2004, the federal Mood”Personal Information Protection and Electronic Documents Act applies to:
all personal information collected, used or disclosed in the course of commercial activities by provincially regulated organizations
unless a substantially similar provincial privacy law is in forcePrivate Sector: PIPEDA
Québec Mood”: Act respecting the protection of personal information in the private sector
B.C.: Personal Information Protection Act
Alberta:Personal Information Protection Act
Ontario: Personal Health Information Protection ActProvincial Private-Sector Privacy Laws
Privacy should be viewed as a Mood”business issue, not a compliance issueThe Bottom Line
Electronic Commerce projected to reach Mood”$220billion by 2001 WTO, 1998
Electronic Commerce projected to reach $133 billion by 2004
Wharton Forum on E-Commerce, 1999The Promise
Estimates revised downward to reflect lower expectations
United States: e-commerce sales were only 1.6% of total sales -- $54.9 billon in 2003.
-U.S. Dept. of Commerce Census Bureau, November 2004
Canada: Online sales were only 0.8% of total revenues -- $18.6 billion in 2003
Statistics Canada, April 2004
Statistics Canada, April 2003The Reality
“Consumer privacy apprehensions continue to plague the Web. These fears will hold back roughly $15 billion in e-commerce revenue.”
Forrester Research, September 2001
“Privacy and security concerns could cost online sellers almost $25 billion by 2006.”
Jupiter Research, May 2002Lack of Privacy = Lack of Sales
“Our research shows that 80% of our customers would walk away if we mishandled their personal information.”
CPO, Royal Bank of Canada, 2003
Nearly 90% of online consumers want the right to control how their personal information is used after it is collected.The Business Case
The Information Security Forum reported that a company’s privacy breaches can cause major damage to brand and reputation:
25% of companies surveyed experienced some adverse publicity due to privacy
1 in 10 had experienced civil litigation, lost business or broken contracts
Robust privacy policies and staff training were viewed as keys to avoiding privacy problems
The Information Security Forum, July 7, 2004ISF Highlights Damage Done by Privacy Breaches
The “Privacy Dynamic” - Battle for the minds of the pragmatists — Dr. Alan Westin
“Trust is more important than ever online … Price does not rule the Web … Trust does.”
Frederick F. Reichheld, Loyalty Rules:
How Today’s Leaders Build Lasting RelationshipsIt’s All About Trust
“When customers DO trust an online vendor, they are much more likely to share personal information. This information
then enables the company to
form a more intimate relationship with its customers.”
Frederick F. Reichheld, Loyalty Rules: How Today’s Leaders
Build Lasting RelationshipsThe High Road
“In 70% of instances where Internet users were asked to provide information in order to access an online informational resource, those users did not pursue the resource because they thought their privacy would be compromised.”
Narrowline Study, 1997Lack of Trust on the Web
Customer Respect Group, February 2004 surveyTrust and Privacy Policies
“42.1% have falsified information at one time or another when asked to register at a Web site.”
10th WWW User Survey, October 1998Falsifying Information on the Web
West Virginia scrap yard operator reported that since 2001, his telephone system has been deluged with confidential CIBC customer data (e.g. SIN, account information, client signature).
Bank acknowledges reports of the misdirected faxes dating back to February 2002.
Scrap yard operator filed a lawsuit against CIBC claiming his business was ruined. CIBC filed a court action accusing him of deliberately leaking customer data.CIBC
The fastest growing form of consumer fraud in North America. his telephone system has been deluged with confidential CIBC customer data (e.g. SIN, account information, client signature).
Identity theft is the most frequently cited complaint received by the F.T.C. — 10 million new victims, and $50 billion in losses every year.
According to PhoneBusters, fraud has now become one of the most pervasive forms of white-collar crime, costing Canadians $40 million since 1995.
November 2004 — ChoicePoint: Identity theft involving 145,000 persons.
December 2004 — Bank of America: 1.2 million records misplaced.
January 2005 — T-Mobile: Illegal access to 16.3 million records.
January 2005 — HSBC: 180,000 MasterCard records stolen.
March 2005 — LexisNexis: Identity theft involving 32,000 records.
March 2005 — DSW Inc: Hacker theft of 103 credit card numbers.
March 2005 — Boston College: Hacker theft of 120,000 alumni donor recordsIdentity Theft
A data aggregation and clearinghouse company that maintains databases of background information on virtually every U.S. citizen.
19 billion public records in its database: motor vehicle registrations, license and deed transfers, military records, names, addresses and Social Security numbers.
ChoicePoint routinely sells dossiers to police, lawyers, reporters and private investigators.ChoicePoint
In a plot twist taken from a Hollywood movie, criminals were creating false identities to establish accounts with ChoicePoint and then using those accounts to commit identity theft.
In response, ChoicePoint:
Notified 35,000 Californians as required by California law, SB1386.
Will notify an additional 145,000 persons that “unauthorized third parties” had obtained their personal information.
Los Angeles police believe that the actual number of persons affected could be 500,000 or more.ChoicePoint:Gateway for Identity Thieves
ChoicePoint will re-screen and re-credential 17,000 customers to verify that they are legitimate businesses.
Since early February, ChoicePoint’s stock value has dropped by more than 23%.
February 2005, Lawsuit filed by identity theft victim.
March 2005, suspension of sales to small businesses — loss of 5% of annual revenue or $900 million.
March 2005, class action lawsuit filed by shareholders.ChoicePoint:Fallout and Cost
An effective privacy program needs to be integrated into the corporate culture
It is essential that privacy protection become a corporate priority throughout all levels of the organization
Senior Management and Board of Directors’ commitment is criticalMake Privacy a Corporate Priority
“ corporate culturePrivacy and Boards of Directors:
What You Don’t Know Can Hurt You”
Guidance to corporate directors faced with increasing responsibilities and expectation of openness and transparency
Privacy among the key issues that Boards of Directors must address
Potential risks if Directors ignore privacy
Great benefits to be reaped if privacy included in a company’s business planGood Governance and Privacy
Simple, plain-language tool (paper and e-versions) corporate culture
Free & self-administered
CSA model code to examine an organization’s privacy management practices
www.ipc.on.ca/PDTPrivacy Diagnostic Tool
“Anyone today who thinks the privacy issue has peaked is greatly mistaken…we are in the early stages of a sweeping change in attitudes that will fuel political battles and put once-routine business practices under the microscope.”
Forrester Research, March 5, 2001