Lee & White Consultants

One of the largest corporate insurers was recently fined by Britain's financial regulator, the FSA for the loss of customer data. Zurich Insurance PLC was fined a record £2.3m for losing 46000 customers' personal information which included identification information, details of bank accounts, credit cards and insured assets which could have resulted in significant loss to customers.

The loss of customers' data dates back to August 2008 when Zurich Insurance had outsourced data work to the company's South African unit which lost an unencrypted back-up tape. The loss however, was not discovered until a year later.

Companies would benefit from learning from the mistakes that cost Zurich Insurance PLC not only £2.3m in fine, but also the loss of its customers' trust which is a valuable asset for any company.

"It served to remind us of the need to strive continually to improve the ways in which we seek to protect customers' data," said Stephen Lewis, chief executive of Zurich Insurance.

Now, what are you as a company doing to ensure that your customers' personal information is protected? Do you have a Personal Data Protection Policy in place in your company, and are your employees aware of them? It would do you well to look at this seriously and ensure you are protected by protecting your customers.

It's almost the end of the quarter, sales numbers are nearly on target, we just need a little boost to get them higher, perhaps even above target, I need that bonus.

"You know what? Let's launch a quick campaign and mail our prospects!"

I'm sure this all sounds very familiar if you are in the marketing department of any medium to large company, and it is a great initiative of course. But who shall you email? Where do you get the addresses?

We could for example mail our prospects, people who expressed some interest in one of our products; or perhaps people who entered that competition last month; perhaps people who were submitted by someone in our friend-gets-friend referral campaign; perhaps the subscribers to our newsletter; what about ex-customers we want back; let's buy a list from a broker; ...

And this is where it gets hairy:

• Are you mailing the right people, possibly sending a super promo mail that will anger a new customer who paid so much more for the same product a few days ago?
• Do you have permission to email these prospects; did you ask them for their permission to send them this kind of promotions and did they opt-in?
• Did you exclude persons who opted out from your list?
• Is your list deduplicated? Are you not sending multiple mails to the same person through the same or different email addresses?
• Are you not publishing your list of email addresses to every recipient?

A mistake at this level can cost you dearly, in terms of losing face or upsetting client or supplier relations, and it could all be solved if you had followed proper procedures when you acquired the email addresses.

All you needed to do was:

• Ask for a prospect's email only when needed.
• If you want to use this information for other purposes, inform the prospect and ask for his explicit permission.
• Allow the prospect to review, change and delete his information at his simple request at any time.
• Check if the supplier of your mailing list or broker has obtained the permission of your prospects and has informed them of the possibility of their information going to you for marketing purposes.
• At any communication, give the prospect the opportunity to opt out of future communications of this kind or of any kind.

A Privacy Impact Assessment at the design phase of a project can detect such opportunities and a Data Protection Audit can analyse and correct the flow of information within your organisation.

It will save you in the long run!

So, here we are again with another case in the series of data handling blunders. The recent careless use of personal data of the Luxembourg branch of Kaupthing bank confirms that proper data handling procedures are crucial. Email addresses of customers were leaked due to the misuse of email.

Inadequately defined procedures for data handling can, and will lead to improper and careless handling of personal data. We've seen this occur countless of times. For example, not too long ago, 25 million records were lost by the HM Revenue and Customs and according to the investigation, the problem was not with individual workers, but due to the lack of processes for data handling.

All organisations should have reasonable security measures to protect personal data from misuse, loss, unauthorised access, and abuse. These measures can be stated in a Data Handling Manual, and must be implemented in a way where all concerned parties are well informed of the handling procedures. It is simply a guideline for handling personal data that should and must be adhered to by all in an organisation.

Unfortunately, in most companies, not only are such manuals non-existent, but where there is such a manual, it is usually collecting dust in some shelf and most employees and contractors are not even aware of or do not adhere to the manual. The other problem is the fact that lack of adherence is usually not noted or if it is, it is not reprimanded regularly - well, at least until a big foul-up happens and becomes the headlines of major newspapers.

It is perhaps more than timely for organisations to draw up these guidelines and train their personnel, ensuring regular audits to maintain adherence - in addition to appointing data protection officers and registering processes of personal data.

If you would like some help in customising a data handling manual, please review our privacy policy and then contact Lee & White Consultants.