Data PrivacyZero And First Party Data

INTRODUCTION

With the development of technology and increasing complexity around information exchanges, there are discussions around various types of customer data. Data from or related to customers or end users is categorized into several kinds. This categorization is majorly based on the mode of collection of information. Zero and first party data is generally data that is sourced from consumers or end users.

Zero party data is information that customers voluntarily and actively provide. This kind of information is often gathered through certain opt-in events or programmes, like surveys, polls, competitions, and loyalty programs. It is the information that a consumer actively and freely shares with a brand/organization.

On the other hand, first- party data is the data that a company obtains passively or discreetly, often without the consumer’s knowledge. first party data is usually gathered through customer relationship management (hereinafter referred to as “CRM”) systems and the businesses utilize it to tailor their products and marketing campaigns. This is the information a company collects about consumers as the consumer interacts with their organization.

DIFFERENCES BETWEEN ZERO AND FIRST PARTY DATA

Although both zero and first-party data both help in the personalization of marketing initiatives, but there are differences between the two when it comes to data analysis, accuracy of insights and customer awareness.

On data analysis, organizations can gain valuable business insights from zero-party data without having to evaluate it because it provides clear information directly from customers. On the other hand, companies need to first examine first-party data in order to gain insights.

On the basis of accuracy of insights, the information that comes directly from the customer, that is zero-party data typically provides more accurate information than first-party data. On customer awareness, the difference lies in both forms of data. Consumers knowingly and voluntarily share zero-party data. However, they may not be aware of first-party data collection by organizations.

IMPLICATIONS OF ZERO AND FIRST PARTY DATA ON PRIVACY

As previously stated, users knowingly and voluntarily share zero-party data and they may not know when organizations collect first-party data.   First-party cookies can only be tracked with the consent of the user, and this is required by a number of privacy laws around the world, including the General Data Protection Regulation (hereinafter referred to as “GDPR”) of the European Union or California Consumer Privacy Act (hereinafter referred to as “CCPA”) of the US. Nonetheless, many people give their consent without completely understanding what they are undertaking. First-party data can therefore spark discussions regarding Data Privacy.

The business value of data generated and the threats surrounding Data Privacy are in contrast to each other when there is a lack of transparency. Organizations must be transparent about how they gather and utilise first-party data in order to comply with privacy rules. Organizations can create privacy policies and incorporate cookie notifications into their websites and other digital media assets to enhance transparency.

Ideally, the ownership of personal data lies with consumers themselves and possible misuse of the data is the major concern leading to strengthening of data privacy norms. Hence, protecting personal data has become a primary focus owing to the exponential growth of the consumer data that businesses are obtaining.

DIFFERENCES BETWEEN THE ZERO AND FIRST PARTY DATA AS PER LAWS

The shift in data landscape has made privacy regulations more stringent, thereby requiring better data collection, consent and protection for all industries.

Currently, there is no specific legislation protecting data protection or privacy in India. Nonetheless, the Information Technology Act ,2000 (hereinafter referred to as “IT Act”) is the primary legislation in India that deal with data protection. In the near future, India is likely to implement a codified law on the subject of data protection.

Although “reasonable security practices and procedures” are not defined in the IT Act, it is defined in the Information Technology (Reasonable security practices and procedures and sensitive personal data or information) Rules, 2011 (hereinafter referred to as “SPDI Rules”), which were introduced in accordance with the IT Act. SPDI Rules further outlines the basic requirements for data protection for sensitive personal information.

Although the SPDI Rules are not meant to be thorough, they do mandate that businesses have a privacy policy, get consent before collecting or transmitting sensitive personal data, and let customers know who will be receiving their information.

Zero party data is collected with consent of consumers. Hence there are not many privacy concerns. This information is owned by the customer only and willfully shared by them. On the contrary, first party data is collected indirectly from consumers and hence has privacy concerns. Here, the primary ownership lies with the organization collecting the data and consequently leads to need for stringent privacy laws because consumers have lack of control over the data and its usage.

Applicability of SPDI Rules on first party data is typically difficult because data collected indirectly and ownership differences will make all data collection legal and available for any purpose without consent or notice to consumers.

The SPDI Rules do not take controllers and processors into account or specifies any differences between them. All businesses that process personal data are required to post privacy policies on their websites that provide information about their processing procedures, the categories of data they gather and why they are collected, any disclosure rules, and descriptions of their security measures.

AMLEGALS REMARKS

The laws indicate a clear emphasis on intention to protect consumer’s data from any misuse. The SPDI Rules provide the rights of data subjects, one to whom data is related to, which are wide enough to cover the range of cyber threats, fraud or crime. However, the mechanism to enforce the rights or grievance redressal is not functioning proactively at the present.

Further, there is lack of distinction between different kinds of data and consequently, there are no methods to effectively deal with various types of data as per their specific characteristics. Either all kinds of data are subject to similar form of laws as per SPDI Rules, or are considered within realm of privacy protection as per IT Act. Therefore, in this classification, zero and first party data are not dealt with categorically under the present laws, and might lead to further ambiguities regarding the same.

–Team AMLEGALS assisted by Ms. Samiha Yadav  (Intern)

For any queries or feedback, please feel free to get in touch with mridusha.guha@amlegals.com or falak.sawlani@amlegals.com