Government body reports back on the commercial use of consumer data in the UK

The Competition and Markets Authority (CMA) has published a report looking at the commercial use of consumer data, following a call for information in January. The DMA met with CMA officials to explain how the one-to-one marketing industry uses consumer and how both businesses and consumers benefit.

The CMA is a government organisation that aims to make markets work well for consumers, businesses and the economy. The report will inform government thinking in the future.

The report makes mention of Data Seal and the DMA Code it says, “The DMA Code is a principles-based code that seeks to achieve a standard of behaviour beyond what is required by legislation”. The DMA research ‘Data Privacy: What the consumer really thinks’ is also cited extensively in the CMA report, which is great for the DMA's profile.

The paper does not recommend that the government introduce fresh regulation. It is intended as a holistic review of the commercial use of consumer data. However, it is clear that the CMA understands the importance of trade in consumer data to the modern economy and how when done right it is a win-win situation for consumers and businesses.

The CMA report states:

“At its simplest, this transaction offers a potential ‘win-win’ scenario where consumers, firms and the economy benefit.”

However, the CMA report does speak discuss how the revolutionary changes brought about by the digital economy have come thick and fast. This rapid change and its complexity has left many consumers feeling disempowered or confused.

The report reads, “However, the collection and use of data has become highly complex and widespread, and the nature of the transaction can be difficult for consumers to understand and engage with.”

As mentioned before the report does not delve into a detailed analysis of legislative prescriptions for the commercial use of consumer data as it was a high level review. The CMA identify a number of points on how businesses collect and use consumer data that could support well-functioning markets based on their research:

• “Consumers should know when and how their data is being collected and used and be able to decide whether and how to participate; and they should have access to information from firms about how they are collecting, storing and using data, so that they can select the firm which best meets their preferences.”
• “Firms should compete on all issues that matter to consumers, including the provision of clear and useable controls that enable consumers to manage data-sharing.”
• “Consumers and firms should share the benefits of using consumer data. Consumers may get a new or better service or lower prices because firms are becoming more efficient, or even trade their data for a direct financial reward. Firms may gain more sales or market share or become more profitable.”
• “The regulation of the collection and use of data should ensure the protection of essential rights such as privacy. The market can help achieve this goal where regulations encourage competition and choice, allowing a ‘race to the top’ by firms to offer consumers better services.”

The CMA are aware how tricky it is to balance the legitimate interests of businesses with the fundamental rights of consumers. The paper speaks about how knee-jerk regulation is often harmful, with a negative impact on innovation. What’s more, both consumers and businesses loose out when regulation has unintended consequences.

The report is positive for the industry as the CMA clearly understands how important the commercial use of consumer data is to businesses, and the immense benefits that consumers gain from it as well. However, the CMA also have the finger on the pulse of consumers and have picked up on the common refrain, ‘I’ve lost control of my personal data’.

The DMA will continue working with the CMA as they advance their work in this area.

You can read the full report here.