Ethical Data Collection: A Guide for Business Owners

Businesses across the globe are harnessing the power of data to improve operations, better understand their customers, and make informed decisions. However, this power comes with responsibility, and data ethics is now a critical consideration for business owners. 

But what is data ethics, and why does it matter? 

This guide to data ethics for business owners examines what defines data ethics, the challenges in collecting data, and five key takeaways to ensure ethical data practices.

A Quick Introduction to Data Ethics

Data ethics refers to the moral and ethical principles that govern how data is collected, used, and shared. The goal of data ethics in business is to ensure that data is used fairly, and for the good of customers.

For business owners, data ethics is about more than just legal compliance. Mishandling data can result in serious reputational damage, financial costs and loss in consumer trust. Examples of data misuse include selling data sets without consent, creating biased data sets, and not protecting data adequately to prevent breaches.

Don’t fall into the trap of thinking data ethics does not apply to your organization. Any business of any size that handles any kind of customer information needs to build data ethics into its framework. Relying exclusively on legal and compliance or data scientists to handle your company’s data ethics isn’t enough.

What Are the 3 Principles Governing Data Collection?

To practice ethical data collection, businesses must adhere to three core principles:

1. Consent: Data collection must always be voluntary and based on informed consent. Customers should understand what data is being collected, why it’s needed, and how it will be used. It is both unlawful and unethical to collect personal data without consent. Remember that customers retain ownership over personal information that is shared with a company.

2. Privacy: Any personal information shared must be protected to ensure customer privacy. It should never be made publicly available and businesses should only collect data that is necessary for their stated purpose. Gathering excessive or irrelevant data is unethical and increases security risks. Ensure data is stored in a secure database and stay on top of the latest cybersecurity measures to prevent breaches and theft. “The definition of privacy keeps getting redefined and the goalposts have been moving a lot. And that’s something that I think is quite risky if we don’t pay attention to that,” said Andy Yen, CEO of secure email service provider Proton, on stage at VivaTech 2023. “I would say that the real definition for many people is probably that no one can exploit your data, period.”

3. Transparency: Businesses must be transparent about data usage and provide clear ways for consumers to manage or delete their data. Explanations of how data will be collected, used, and shared need to be easily understandable for customers. Failing to disclose your company’s data usage policies is unlawful and unethical.

The Importance of Data Transparency

Practicing transparency with customers can be scary for businesses. Fear of losing customers or sharing company practices can cause leaders to run in the other direction. 

But transparency is a cornerstone of data ethics and actually good for business because it builds trust. At VivaTech 2024, Salesforce AI CEO Clara Shih reinforced the importance of transparency in addressing customer data concerns: 

“The number one question I get when I talk to our customers is around trust. And that encompasses several different aspects from data privacy to data security. It’s not just about making sure sensitive data doesn’t leave your organization. Even within companies, different employees and different departments have access to different kinds of data. Really making sure that we honor those sharing rules and permissioning – It’s about ethical guardrails.”

Consumers increasingly expect businesses to be open about their data practices, including:

• Clear Communication: Explaining in simple terms what data is being collected and why.
• Proactive Disclosure: Informing users about third-party data sharing and its purposes.
• Accessible Policies: Making privacy policies easy to find and understand.

Ethical transparency goes beyond meeting legal requirements; it involves making proactive efforts to keep customers informed and empowered.

Ethical Considerations When Collecting Data

When considering the ethical issues in data collection, businesses must weigh the potential benefits of the data against the risks. Ethical data practices are not just about avoiding harm, but actively seeking to do good. 

While essential for modern business, data collection does pose several ethical challenges such as:

• Privacy Concerns: Mishandling personal information, especially sensitive data such as health or financial information, can cause serious harm to customers’ privacy.

• Informed Consent: Users may unknowingly agree to terms without fully understanding them, leading to a lack of truly informed consent.

• Bias and Discrimination: Misusing data can perpetuate or amplify biases, particularly in areas like hiring or credit scoring.

• Security Risks: Poor data management or insufficient cybersecurity can lead to breaches, putting consumer data at risk.

• Ethical Sharing: Customer information should never be shared or sold to another party without specific consent from individuals.

• Responsible AI Algorithms: Artificial intelligence (AI) and machine learning technologies are increasingly being used to collect and analyze data. A data code of ethics should be created to ensure AI algorithms don’t create skewed or biased results that could lead to unfair outcomes for customers.

At VivaTech 2024, Publicis Sapient CEO Nigel Vaz confronted the questions business leaders need to ask themselves about AI ethics and data integrity, saying, “How are you thinking about making sure that you’re not reinforcing bias, but essentially teaching the model through reinforcement learning to eliminate bias in things like mortgage allocations in banking?”

By embedding ethics into data collection and AI usage, businesses can address these data collection considerations and ensure their practices are not only effective but also fair and transparent.

Can ‘Big Data’ Be Ethical?

Big data refers to extremely large datasets that are analyzed by computers, often using AI, to find patterns and trends in human behavior. Big data poses unique challenges due to its sheer scale and complexity. And businesses that handle large datasets may find themselves asking the question: Is big data collection ethical?

Yes, it can be ethical if handled responsibly. The answer for each company lies in how the data is collected, managed, and shared.

For big data collection to remain ethical, businesses must:

1. Maintain Transparency: Ensure customers are aware of how their data contributes to larger analyses.

2. Avoid Harm: Use big data to address societal challenges, not to exploit vulnerabilities.

3. Ensure Fairness: Avoid bias in datasets and algorithms to prevent discrimination in outcomes.

Ethical Data Collection in Healthcare

The healthcare industry provides a powerful example of how big data can be both ethical and impactful. Researchers collecting patient data can identify trends, improve treatments, and even predict disease outbreaks.

However, ethical data collection in healthcare relies on organizations following certain principles:

• Anonymization: Protecting patient identities by removing personally identifiable information.

• Informed Consent: Ensuring patients understand how their data will be used.

• Equity: Verifying that datasets are diverse and inclusive to avoid bias in research outcomes.

For a deeper look into the ethics of healthcare data collection, check out this article: Collecting Healthcare Data: Ethical Dilemmas and Solutions

5 Key Things to Remember When Collecting Data

For business owners working to ensure ethical practices, here are five key takeaways to remember:

1. Collect with Purpose: Only gather data you genuinely need.

2. Obtain Informed Consent: Ensure users understand what they are agreeing to and why.

3. Be Transparent: Communicate your data practices clearly and proactively.

4. Protect Data: Invest in strong, up-to-date security measures to safeguard collected data from breaches.

5. Review Regularly: Regularly evaluate your data collection practices to make sure they align with evolving ethical standards.

Ethical data practices are not only good for customers – they’re good for business. By addressing ethical issues in data collection practices, business owners can build companies that are compliant, trustworthy, and values driven.