Consumer Trust in Smart Products; Balancing Innovation and Privacy As Personal Data Fuels the Fourth Industrial Revolution

This year World Consumer Rights Day is focusing on trusted smart products, examining how the wants and needs of consumers must be central to the development of digital products and services for a #BetterDigitalWorld. Here CPRC Senior Research and Policy Officer, Brigid Richmond explores this theme in the Australian context.

Australians are increasingly connected – through phones, computers and now a range of smart devices, including wearable fitness trackers, smart TVs and voice-activated assistants. Consumer data fuels these products. Exploiting technology’s potential – to save money, use energy more efficiently, provide more proactive healthcare – requires Australians to trust how these devices use their personal information. And right now, they don’t.

Research conducted on behalf of CPRC showed that Australians do not fully understand the information collected about them, and that they want greater transparency and control over how companies collect, share and use this information.

There are reasons to be concerned. Questionable data sharing practices of major organisations continue to emerge at alarming intervals. This month, an ABC investigation uncovered that Quantium, a data science and AI platform, had shared de-identified NAB customer transaction data with Sportsbet to support targeted marketing. At the end of 2018, the New York Times found Facebook user data was accessible for a period by organisations including Amazon, Apple, Netflix and Spotify. Reports are emerging that insurance companies in the US are experimenting with using individual’s social media accounts to calculate insurance quotes. In all these cases, the consumer has not been aware of the data use or given the opportunity to opt-out.

CPRC’s forthcoming report, A Day in the Life of Data, highlights the opaque nature of the data collection ecosystem. Large corporations’ business models are built around the extraction, sharing and amalgamation of users’ personal data. The ‘data exhaust’ of Australians’ daily online interactions is collected and shared to enhance user profiles and enable targeted advertising, and consumers have limited vision or control of that process. Privacy policies can be lengthy and vague, confusing rather than enlightening consumers.

So, what can we do about it? How do we build trust?

Most importantly, we need economy-wide data protections, that recognises consumers are the owners of their personal data and allows them control over the collection, sharing and use of that data.

But we also need market transparency – for government, consumers and industry – so that all participants understand the supply chain. Fit for purpose regulation isn’t possible when governments don’t understand the market. Better business practices are also important. For example, privacy policies could be improved to be clearer, more comprehensible and provide specific information on data sharing practices.

CPRC is a strong supporter of creating a trusted environment for greater sharing and use of consumer data to support innovation. Smart products promise enormous social benefits. But to get the most out of technological development, consumers will need to trust the building blocks – primarily, the sharing, collection and use of their data.