The conversation around privacy and personal data management is louder and more complex than ever. Consumers increasingly demand control over their information. Companies face a minefield of regulatory challenges and litigation risks. The concept of first-party verification and consent is central to navigating this landscape — a paradigm that empowers consumers and offers companies a framework to mitigate legal risks.
Empowering Consumers With Data Ownership
Companies, in their pursuit of tailored services and mitigating fraud, often rely on comprehensive dossiers on individuals. These dossiers can include everything from basic personal information to more sensitive data like financial records, employment history, and even real-time location data. 60 Minutes reported that data brokers have detailed reports on users’ “religion, ethnicity, political affiliations, user names, income, and family medical history.”
While useful for companies, extensive data collection raises significant privacy concerns and the potential for misuse or errors that can have far-reaching implications on someone’s life.
At the heart of first-party verification is the principle that individuals should have the right to consent to use their personal data and verify the information being used. In the current status quo, third-party data brokers collect, aggregate, and sell personal information without consulting the individuals the data concerns.
In some states, there are ways to consent to whether or not you want your data sold. However, even California residents and Europeans in the EU are not fully shielded by their regulations.
By enabling consumers to verify their information before it is shared with or sold to others, first-party verification ensures the accuracy of data and upholds the integrity of personal information. While this information may seem valuable to companies, without first-party consent, these dossiers are ticking timebombs for litigation.
The Price Companies Pay
For companies, the shift toward first-party verification and consent is not merely a compliance or ethical consideration but a strategic imperative. Using inaccurate or unverified data can lead to significant legal challenges, including lawsuits for wrongful denial of services or employment based on erroneous information.
Companies can significantly reduce the risk of such litigation by adopting first-party verification. This model ensures that the data used in decision-making processes is accurate, up-to-date, and validated by the individual it concerns, thereby minimizing potential disputes and compliance costs.
Currently, the FTC is cracking down on data brokers, with high-profile cases including its suit against Kochava over alleged mishandling of sensitive geolocation information. Kochava CEO Charles Manning said, “This case is really about the FTC attempting to make an end-run around Congress to create data privacy law.”
Regardless of the outcome, this case speaks to a cresting wave of litigation that businesses face with regard to personal identifiable information (PII).
Last year, ADP settled a suit wherein an individual was incorrectly identified as a drug dealer. Were this job seeker allowed to verify this information before they submitted it, the company would not have retracted their offer and ADP would not have needed to go to court. In 2022, Inflection Risk Solutions was ordered to pay $4 million in a class action lawsuit over inaccurate background checks.
In an environment where privacy regulations are becoming increasingly stringent, with new laws enacted in various states and proposals for federal legislation on the horizon, companies must adapt to survive. First-party verification provides a proactive solution, aligning business practices with legislative trends and prioritizing consumer rights and data protection.
The Path Forward
As we look to the future, the adoption of first-party verification and consent by companies across industries will not only respond to consumer demand and regulatory pressures but will also serve as a competitive differentiator. Those who embrace this shift will be better positioned to build trust with their customers, navigate the legal landscape, and set new privacy and data integrity standards in the digital age. Soon, you can expect individuals to potentially monetize their data, deciding who gets access to it and under what terms.
This evolution towards empowering consumers and protecting companies through first-party verification and consent represents a pivotal moment in the ongoing dialogue about privacy, data ownership, and the relationship between businesses and individuals.
The transition to first-party verification and consent requires a fundamental rethinking of how personal data is collected, used, and shared. Businesses must invest in secure, user-friendly platforms that facilitate verification, ensuring that consumers can easily authenticate their information.
Similarly, transparent policies and clear communication about how data will be used are essential to gaining consumer trust and consent. Through simple solutions like TruaScore and TruaID, companies can offload the responsibility of verifying and storing PII, and individuals can verify their information is accurate.