CMA publishes findings on the commercial use of consumer data

17 Jun 2015 02:11 PM

The CMA has yesterday published a report into the collection and use of consumer data.

The report follows a call for information which was issued in January and draws on a range of evidence from businesses, consumers, regulatory bodies and academics, as well as research commissioned from DotEcon and Analysys Mason which was also published yesterday.

Consumer data is increasingly used across a wide range of sectors. Firms have always sought information on actual and potential customers but the collection and use of data has become much more complex and widespread in the digital age. The Competition and Markets Authority’s (CMA) primary aim in conducting this work was to increase understanding of the issues and inform our future competition and consumer work.

The report finds that:

there is scope for a wide range of benefits for both firms and consumers from the use of data. Firms can gain from better customer targeting, service improvements, logistical and transaction efficiencies and fraud prevention. Consumers can receive more personalised services, wider choice, and more relevant advertising and targeted offers
these benefits will only be realised if consumers provide data and firms use this data in transparent and competitive markets, where firms compete over the provision of services including the protection they offer to consumers’ data
all kinds of data about consumers is routinely collected by businesses. However, many consumers do not fully understand what data is collected and how it is used. Many have concerns about data being lost or misused
there are concerns about the effectiveness of privacy policies, terms and conditions and cookie notices in enabling consumers to control the collection and use of their data. The CMA also heard concerns about whether the current regulatory regime is effective in promoting consumer trust

The call for information identified a number of positive developments, including self-regulatory initiatives, efforts to raise awareness of privacy controls and better tools to help consumers control the use of their data. Some firms are also offering new ways to empower consumers to enable them to manage their data.

However, consumer confidence appears to be fragile and there are concerns that future changes in how data may be collected and used (such as more passive collection via the Internet of Things) could test how far consumers are willing to continue to provide data. The European data protection framework is currently being revised as part of the European Commission’s Digital Single Market programme which may address some of these concerns.

Alex Chisholm, CMA Chief Executive, said:

As the use of consumer data increases, consumers are benefiting across a wide range of markets, including through improved services that offer more flexibility, greater choice between providers and more information to find better prices.

However we also found widespread concerns about how such data is collected, incomplete awareness amongst consumers and hence a fragile level of trust – all of which has the potential to undermine benefits in future.

As our report finds, consumer data markets are becoming increasingly relevant across the full range of our work. We wish to see greater transparency to ensure consumers can choose to continue to benefit from the collection and use of their data in efficient and competitive markets.

This report has helped identify areas of potential concern. We will play an active role in the future regulation of consumer data and will work with other regulators to track new developments and ensure an integrated approach to tackling specific problems.

The report identifies some elements that could support well-functioning markets:

consumers should know when and how their data is being collected and used and be able to decide whether and how to participate
firms should compete to provide better services to consumers on the issues that matter to consumers, such as the controls enabling them to manage their own data-sharing
consumers and firms should share the benefits of using consumer data
the regulation of data should ensure the protection of essential rights such as privacy
where there are breaches of regulations, enforcement must be undertaken proportionately and effectively

Further details on the call for information are available on our consultation page.

Notes for editors

The CMA commissioned DotEcon and Analysys Mason jointly to carry out factual reviews of data collection and use in motor insurance, clothing retail and games applications. Their report is published alongside the outcome of the call for information.
The CMA is the UK’s primary competition and consumer authority. It is an independent non-ministerial government department with responsibility for carrying out investigations into mergers, markets and the regulated industries and enforcing competition and consumer law. From 1 April 2014 it took over the functions of the Competition Commission and the competition and certain consumer functions of the Office of Fair Trading (OFT), as amended by the Enterprise and Regulatory Reform Act 2013.
The CMA carries out calls for information under its general review function in section 5 of the Enterprise Act 2002. In carrying out a call for information, the CMA does not have compulsory information gathering powers. Calls for information enable the CMA to assess markets and they may be, but need not be, a pre-cursor to a market study.
UK competition authorities have previously been active in examining some of these developments surrounding consumer data. The OFT carried out a series of projects relating to the online economy and to the use of data including looking at online targeted advertising in 2010 and at personalised pricing in 2013.
The CMA is unable to provide individual consumers with redress in relation to concerns about their consumer data and how it is used. The Information Commissioner’s Office is responsible for upholding information rights.
Enquiries should be directed to Rory Taylor (rory.taylor@cma.gsi.gov.uk,020 3738 6798).
For information on the CMA see our homepage, or follow us on Twitter @CMAgovuk, Flickr and LinkedIn.