Consumer privacy

Consumer privacy concerns date back to the first commercial couriers and bankers who enforced strong measures to protect customer privacy. Harsh punitive measures were passed as the result of failing to keep a customer's information private. In modern times, the ethical codes of most professions specify privacy measures for the consumer of any service, including medical privacy, client confidentiality, and national security. These codes are particularly important in a carceral state, where no privacy in any form nor limits on state oversight or data use exists.[2] Corporate customer privacy practices are approaches taken by commercial organizations to ensure that confidential customer data is not stolen or abused.[3] Since most organizations have strong competitive incentives to retain exclusive access to customer data, and since customer trust is usually a high priority, most companies take some security engineering measures to protect customer privacy. There is also a concern that companies may sell consumer data if they have to declare bankruptcy, although it often violates their own privacy policies.[3]

The measures companies take to protect consumer privacy vary in effectiveness, and would not typically meet the much higher standards of client confidentiality applied by ethical codes or legal codes in banking or law, nor patient privacy measures in medicine, nor rigorous national security measures in military and intelligence organizations. The California Consumer Privacy Act, for example, protects the use of consumer privacy data by firms and governments. This act makes it harder for firms to extract personal information from consumers and use it for commercial purposes. Since companies operate to generate a profit, commercial organizations also cannot spend unlimited funds on precautions while remaining competitive; a commercial context tends to limit privacy measures and to motivate organizations to share data when working in partnership. The damage done by privacy loss is not measurable, nor can it be undone, and commercial organizations have little or no interest in taking unprofitable measures to drastically increase the privacy of customers. Corporations may be inclined to share data for commercial advantage and fail to officially recognize it as sensitive to avoid legal liability in the chance that lapses of security may occur. This has led to many moral hazards and customer privacy violation incidents.[4]

Some services—notably telecommunications, including Internet—require collecting a vast array of information about users’ activities in the course of business, and may also require consultation of these data to prepare bills. In the US and Canada, telecom data must be kept for seven years to permit dispute and consultation about phone charges. These sensitivities have led telecom regulation to be a leader in consumer privacy regulation, enforcing a high level of confidentiality on the sensitive customer communication records. The focus of consumer rights activists on the telecoms industry has super-sided as other industries also gather sensitive consumer data. Such common commercial measures as software-based customer relationship management, rewards programs, and target marketing tend to drastically increase the amount of information gathered (and sometimes shared). These very drastically increase privacy risks and have accelerated the shift to regulation, rather than relying on the corporate desire to preserve goodwill.

Concerns have led to consumer privacy laws in most countries, especially in the European Union, Australia, New Zealand and Canada. Notably, among developed countries, the United States has no such law and relies on corporate customer privacy disclosed in privacy policies to ensure consumer privacy in general. Modern privacy law and regulation may be compared to parts of the Hippocratic Oath, which includes a requirement for doctors to avoid mentioning the ills of patients to others—not only to protect them, but to protect their families— and also recognizes that innocent third parties can be harmed by the loss of control of sensitive personal information.[5][6]

Modern consumer privacy law originated from telecom regulation when it was recognized that a telephone company—especially a monopoly (known in many nations as a PTT)—had access to unprecedented levels of information: the direct customer's communication habits and correspondents and the data of those who shared the household. Telephone operators could frequently hear conversations—inadvertently or deliberately—and their job required them to dial the exact numbers. The data gathering required for the process of billing began to become a privacy risk as well. Accordingly, strong rules on operator behaviour, customer confidentiality, records keeping and destruction were enforced on telephone companies in every country. Typically only police and military authorities had legal powers to wiretap or see records. Even stricter requirements emerged for various banks' electronic records In some countries, financial privacy is a major focus of the economy, with severe criminal penalties for violating it.