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Why Do Companies Need Data Privacy Tools?

Updated: May 29, 2023

Why Do Companies Need Data Privacy Tools

Data privacy has been on the minds of everyone in business for some time now, and for good reasons. With new regulations being passed and coming into effect, no company wants to make headlines for the wrong reasons and face hefty fines.

This added concern started in 2018 when the General Data Protection Regulation (GDPR) went into effect and gained additional attention again when California Consumer Privacy Act (CCPA) became effective on July 1, 2020.

Brazil's General Data Protection Law (LGPD) came into effect in Brazil LGPD) on Sept. 18, 2020, and Virginia (VCDPA) is on the move with Colorado’s CPA that will both come into effect in 2023.

That's not only a lot of acronyms to keep track of, it's also a lot of regulations that can have a huge impact on companies. As time goes on, you'll see that non-compliance fines are high:

They can be $5,000 to as high as $100,000-plus, depending on the number of privacy violations! So it's easy to see why it's becoming more important than ever to ensure that you're collecting consent for using personal data.

As customers become more aware of the importance of their personal data and want to know how their information is being used, the data protection acts are looming over companies, which will need to develop strategies to collect, manage, and respect consumer privacy preferences for both better customer engagement and privacy compliance. In 2021, the cost of non-compliance will be among the biggest challenges for businesses.

Every company will need to think about how they manage their consent and how they communicate it to their customers.

The GDPR regulations have been in effect for 3 years now, and companies are still scrambling to understand the new regulations to ensure they are compliant. In this article, we look at how consent management software will become vital in helping companies remain compliant.

It's hard to believe that just a few years ago, one of the biggest challenges in marketing was to get your subscribers to give you their email addresses. Today, we're faced with a drastically different landscape.

The EU GDPR update has changed everything for email marketers. As these privacy regulations spread across the world and into the U.S., a myriad of complex new regulations and compliance obligations are coming to fruition around the world. And even if your company isn't based in a particular country, you'll still be bound by their data privacy laws if you have customers in that country.

What is GDPR?

The General Data Protection Regulation (GDPR) is a set of comprehensive personal data protection that applies to any company that does business in the EU or businesses that collect data from the EU audience. GDPR is designed to help EU citizens take better control of what happens with their personal data.

What is CCPA?

CCPA is a privacy law that determines how organizations around the globe are allowed to handle the personal information of California residents.

If your organization isn’t compliant with the CCPA, $2,500 (which can vary) can be fined by the General Attorney of California for every unintentional violation and $7,500 for every intentional violation.

These sums can quickly add up when you're dealing with large numbers of customers. If your organization is not managing consumer privacy and user consent and subsequently has violations like this, you may have to devote a dedicated chunk of your operational budget to paying these fines!

What is a Consent Management Platform?

Consent management is a system or process for allowing customers to determine what personal data they are willing to share with an organization, as well as other third parties.

Partner companies, such as CRMs and tech vendors, need to know how much personal information a consumer would like to allow them access.

A consent management platform (CMP) enables companies to log and track when their customers give them consent to use their personal data and keeps records to ensure that the organization has complied with global regulations and laws.

It also allows an organization to gather customer consent quickly and easily in coordination with any other automation platform they might be simultaneously operating.

Why Should Companies Invest in Consent Management Platform

Whether you are a citizen of the E.U. or live outside it, the GDPR privacy laws affected all organizations starting May 2018. Businesses who rely on consumers in the E.U. to send and receive messages via email, opt-in newsletters, and text messages must now comply with the General Data Protection Regulation (GDPR)

If your business collects and curates data from the California residents, it must now comply with the CCPA regulations and get prepared for new legislation (CPRA) amending the existing regulations (CCPA), which will come in effect on Jan. 1, 2023. Virginia and Colorado also have regulations that will begin at this time. The residents of these two states will require companies to reveal how they use data collected from them.

A CMP helps you to collect, manage, store consent, and understand how you can get consent from your online audience members to comply with all privacy legislation. Make sure you don't rely on just one component of the law because there are many requirements for compliance, such as ensuring your data is secure. Remember:

By collecting and processing personal data, most organizations are likely to be caught within the privacy compliance net. If your organization is collecting and processing personal data, you should develop your privacy and consent strategy to avoid the risks of fines.

Failure to comply with privacy regulations can cost £17.5 million (over $24 million) or 4% of annual global turnover – whichever is greater – for violations. That's a staggering amount that could cause corporate heads to quickly roll!

As more privacy laws are being introduced around the world, consent management platforms are becoming an integral tool for any organization's operational best practices.

Consent management platforms collect and store consent, allowing users to agree to certain terms before a company collects their personal data. Any company that collects data from users, or participates in the sharing, buying, or selling of consumer data, will need privacy compliance and consent policy and a solution to manage it.

Difference Between 'Consent Management' and 'Preference Management'

While consent management and preference management might sound alike, their goals are separate. However, both are highly beneficial for a business to actively engage in privacy and customer-centric digital advertising strategies.

While collecting consent in the initial build-up creates a marketing roadmap, it involves user acquisition through opt-in channels. Preference management involves collecting the user's behavioral data gathered from site usage history as well as feedback mechanisms like forms, surveys, or polls.

Lead capture tools that allow data to be collected offline when the customer is visiting the organization’s website or mobile app, establish licenses via personalized consent granted by the customer during onboarding.

Preference Management

Preference management allows customers to make choices about their preferences. It enables the customer to have control over the frequency of communication and the topics they would like to receive information on.

The customer can also freely share any kind of data with companies, so long as they are able to provide consent - an important part of the preference management process and where the meaning comes into play.

The preference management process refers to providing the users with all, or any of the following: a choice in how often they want to be contacted, a choice as to what types of products and/or services they may be interested in, and information on how and why their data is being collected.

But let's not forget about consent, which is just one component that must be handled as part of preference management. Consent management provides transparency by noting when individuals need permission or consent before doing something online.

When is User Consent Required?

User consent is required anytime an organization collects information from privacy-protected citizens through e-mail, newsletters, form-submission, cookies, and every conceivable way.

On Jan. 1, 2023, organizations will need to offer user consent for Virginia and Colorado as the privacy laws have been officially passed and will be in effect.

User consent under GDPR includes the following points:

Contractual requirement

On delivering/supplying goods, user consent is a prior requirement to deliver orders successfully.

Legal obligation

When it comes to processing a particular type of data, there are usually some legal details that need to be reconciled.

Performance of public tasks

Authorities, organizations, offices that perform public service, or state-run activities do not need to comply with the consent collection process. This includes schools, hospitals, governmental departments, and police forces.

What about DSAR?

Data Subject Access Requests allow a member of the public to request access to information about them that is being held by a company or organization. It's a right established under data protection laws and allows a person to find out what personal data a company is processing about them, as well as being able to have it corrected or removed from their system.

A person’s information should be presented in a format that they can easily understand. All data collected from a person must be relevant to the purpose for which it was collected.

Why do Brands, Publishers, and Organizations need a CMP?

Consent and transparency are critical in both the compliance and the user experience of apps, particularly when it comes to monetization. To help meet these goals, a CMP provides companies with control over message appearance and placement while keeping sensitive information confidential.

The compliance management providers offer permission management capabilities and built-in auditing capabilities. This allows companies to always stay compliant throughout the selection process by presenting users with a series of options concerning whether they wish to get contacted by certain organizations based on topics such as age, income, gender, and more.

Wrap Up

The key takeaway for any organization, publisher, or marketing executive is to get prepared now! U.S. companies shouldn’t delay, as countries outside Europe and here in America are moving forward with data-privacy laws. It’s all just getting started!

Adzapiers’ CMP provides proof of compliance via accessible audit trails that will help protect you from fines. They are also highly customizable to look and feel like your brand. The CMP offers flexible implementation options, including banners, which are easy to implement with banner placement flexibility for your product components.

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