Ethical Data Collection for Businesses Inside the EU

In the European Union, ethical data collection is governed by strict regulations designed to protect individuals' privacy and ensure transparency. Businesses operating within the EU, even ones headquartered outside the bloc, are obligated to follow clear ethical procedures in order to avoid penalties.

This guide covers the essential info companies need to know about ethical EU data collection: how it is defined, the procedures, and considerations for businesses based outside the EU.

How the EU Defines Ethical Data Collection

The cornerstone of EU data collection regulations is the General Data Protection Regulation (GDPR) – the toughest privacy and security law in the world. This EU legal framework sets out clear guidelines for how businesses and organizations operating in the EU can ethically collect, store, and process personal data.

GDPR went into effect in May 2018 and was the bloc’s first major data privacy and security law. It imposes legally-binding ethical data obligations onto any organization that collects EU citizen data, no matter where it is based in the world.

To be considered ethical under GDPR regulations, data collection has to always be lawful, fair, and transparent. This means organizations must inform individuals about what data is being collected, why it is being collected, and how it will be used. This communication needs to happen at the moment you collect personal data from a user, not after the fact. Additionally, data collection should be limited to what is necessary. Gathering excessive or irrelevant information violates GDPR regulations.

Non-compliance with GDPR rules can be extremely expensive. Fines can reach up to €20 million, or 4% of the firm's worldwide annual revenue from the preceding financial year, whichever is greater. In April 2023, Meta was issued the largest-ever GDPR penalty – a €1.2 billion fine for improperly transferring personal data to the U.S.

Data Hoarding vs. Data Collecting

While data collection is essential for businesses and research, data hoarding is a growing problem for companies and organizations. Data hoarding is concerning because it creates security and privacy risks and can impact a company’s operations.

But what is data hoarding? Unlike ethical data collection, which gathers relevant and necessary data with a clear purpose, data hoarding involves collecting excessive amounts of data without a defined use case. Holding on to large amounts of data with no purpose can lead to security vulnerabilities, inefficient data management, and potential regulatory violations.

Ethical data collection follows the principle of data minimization – the practice of ensuring only necessary information is collected and stored for a limited period. Organizations should conduct regular audits to eliminate outdated or unnecessary data and avoid the risks associated with data hoarding.

Is Data Hoarding Illegal?

Whether or not data hoarding is legal depends on an organization’s compliance with data protection laws. Under GDPR, organizations have to justify the reason they collect and process data. Holding onto excessive, unused data without a valid legal basis can violate GDPR data processing principles, leading to hefty fines and reputational damage.

The more data a company stores, the more data it has to protect as well. Organizations that fail to sufficiently secure data are at risk of being breached. That can result in legal and financial consequences too. Ethical data collection procedures help businesses avoid these risks while maintaining compliance and trust with their customers.

Ethical Data Collection Procedures

Following correct procedures for ethical data collection ensures compliance with EU regulations and makes consumers more likely to share their data. 

Here are key steps organizations should take:

1. Obtain Informed Consent: Before collecting personal data, businesses must clearly inform individuals about what data is being gathered, how it will be used, and their rights regarding their information. Consent must be freely given, be specific, and be revocable at any time.

2. Follow Data Minimization Practices: Only collect data necessary for your organization’s intended purpose. This reduces risks associated with data breaches and regulatory non-compliance.

3. Ensure Transparency and Accountability: Businesses should provide clear privacy policies and allow users to access, modify, or delete their data upon request. EU regulations specify the right to erasure, also known as “the right to be forgotten.” This allows an individual to request to have their data deleted so that it can no longer be found by third parties, such as search engines.

4. Secure Data Storage and Processing: Encrypting sensitive information and implementing strong access controls helps protect collected data from unauthorized access and cyber threats.

5. Regularly Audit and Update Data Management Practices: Organizations should regularly review their data collection practices to ensure compliance and remove outdated or unnecessary information.

Follow these procedures to ethically collect and handle data while respecting individuals' privacy rights and regulatory obligations. GDPR also has a compliance checklist for data controllers to help secure organizations, protect customer data, and avoid costly fines.

Considerations for Businesses Based Outside of the EU

Many businesses operating outside the EU still need to comply with GDPR and ethical data collection principles. If your company collects data from EU citizens, it has to adhere to the same strict regulations as EU-based organizations.

Key Considerations:

• Appoint a Data Protection Officer (DPO): Companies handling large amounts of EU citizen data may be required to appoint a DPO to oversee compliance.

• Implement GDPR Compliance Measures: Ensure your company uses consent mechanisms, security protocols, and data management strategies that align with EU regulations.

• Understand Cross-Border Data Transfer Rules: Businesses transferring data outside the EU need to comply with data protection frameworks such as Standard Contractual Clauses (SCCs) or adequacy agreements.

Ethical data collection is more than a legal requirement in the European Union. It is a best practice that safeguards privacy and builds organizational integrity. Businesses that stick to these ethical and legal guidelines, regardless of their location, can ensure responsible data collection.

Still have questions about ethical data collection? Check out VivaTech’s Guide to Ethical Data Collection for Business Owners.