The changes to data protection laws are expected to be ratified by the Council of the European Union by the end of 2014. The new rules will mean big changes for businesses that collect consumer data. They are designed to protect individuals from aggressive marketing techniques and give them more control over where and what information about them is held.
How the Changes Will Affect Small Businesses
All businesses should be reviewing the data they hold, how they currently manage it, and what they do with it, so that they can plan how to respond to the changes. Even if your small business has a small customer database, if you sell products or services to the public, you could be affected, and compliance may cost more than you expect.
People already have the right to see what information you hold about them, but the new rules will mean you can’t charge a fee for this. It has to be free, and you have to pick up the tab for the time and effort involved. Having accurate data is important for many reasons, but never more than now.
Whether or not the information is accurate, customers may then want their data deleted completely, and you have to comply. You can no longer just mark the record, ‘do not contact’; you have to delete everything about a customer who requests it. If you have records held for different purposes in different areas within your organisation, the deletion exercise must cover them all. If one is missed and a person is contacted and complains, you could face a fine based on your annual turnover. The percentage of this imposed as a fine will depend on the perception of the severity of the offence. Your outsourced bookkeepers could be one source of assistance for this.
The Questions to Ask
Every new customer must be asked if their data can be kept. No longer will it be sufficient to have a tick box for them to opt out. They must respond about whether they want to opt in. Customers must also give their permission for you to use their data for customer profiling – working out what they are likely to be interested in based on their purchasing history. Many will agree, so that they can receive relevant offers, such as money off vouchers for items they have been purchasing before. Others will not, preferring to keep their buying habits, and their lifestyles, private.
Whatever your activities, if you need to keep records of customers for marketing or other purposes, you need to work out how to respond to the new rules. There are likely to be cost implications that need to be factored into your cash flow projections. If you discuss it with your outsourced bookkeepers, you will probably find there are a number of ways in which they can help you.