When opt-outs aren't enough

John C. Tanner
19 Oct 2011

We hear more and more about how service providers need to become more customer-centric. Which is great. But a lot of the talk on customer-centricity has been focused on things like making the backend more flexible, or marketing challenges like how to create tiered data-cap package plans that add obvious value for money without resulting in bill shock.

Which is also great. But service providers also need to think about another crucial aspect of the customer relationship: taking care of their personal data responsibly, and assuring them that you're trustworthy enough to do so.

I've written about this before, but it's worth repeating for a couple of reasons.

One: as the rise of cloud services and social networking encourages users to entrust everything from files to personal data to the care of service providers, the increasingly pertinent question will be the extent to which service providers are held responsible for securing data, and held liable when that data gets hacked.

Two: despite the plethora of bad publicity that any organization gets whenever it loses personal data or shares it with third parties in unexpected ways, some service providers still manage to get it wrong and generate their own bad publicity.

Take Sony Online Entertainment, whose PlayStation Network (PSN) was hacked in April, compromising over 100 million accounts, which resulted in a class-action lawsuit on behalf of users whose data was lost. Tasked with how to deal with the liability issue in case of future hacks, Sony's solution was to amend PSN's terms and conditions to include a clause under which users promise not to engage in any class-action lawsuits against Sony if future hacks occur. PSN customers who don't agree to the T&C will be banned from the network.

Then there's OnStar, a US company that offers navigation, emergency and security services (as well as hands-free voice services) to vehicle drivers for a monthly fee. As you might imagine, the service utilizes GPS to track the vehicle's location. Last month, OnStar notified its customers of a change in its privacy policy that granted it the right to sell customer data - to include geographic data accumulated by the tracking function - to third parties. OnStar also advised customers that their vehicles would continue to be tracked even after they canceled their subscriptions (reportedly to make it easier for former customers to return to OnStar).

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