Bridging the Trust Gap: Data Misuse and Stewardship by the Numbers

Data misuse occurs
when consumers are
unpleasantly surprised that
data about them has been
collected or that it has
been used in new ways...
...and perceive such
practices to be
potentially harmful…
...and feel that the
company should not
engage in them.
Source: BCG.
D ATA M I S U S E
!0101010
1
0
0101
10
0101010
1010101
Data Misuse Is a Hidden Landmine for Companies
The trillion-dollar big data opportunity is at stake

20% of US Consumers Have Perceived a Data Misuse
Over the next five years, the number of affected consumers could more than double
Source: BCG Big Data and Trust Consumer Survey of more than 8,000 consumers in France, Germany, Italy, Spain, the UK, and the US, conducted in November and
December 2015.
NOW THE FUTURE
We predict that the number of
consumers who perceive a data misuse
will dramatically increase over
the coming years as a result of rising
press coverage and exploding
social media use.
Directly affected Indirectly affected

Data Misuse Has a High Cost
Misuse costs companies one-third of revenue from affected US customers in the first year
20%of
consumers
are affected
by data
misuse
YEAR 1
YEAR 1
YEAR 2
33%
6%
indirectlyaffected
30%
13%
Y2
SPENDING
DROP
SPENDING
DROP
SPENDING DROP
Source: BCG Big Data and Trust Consumer Survey 2015.
Note: The drop in spending reflects the share of company revenue at the time of a data misuse that is subsequently lost.
10%
8%
6%
3%
YEAR 2
In Year 2,
overall
company
revenue falls
3%-5%
In Year 1,
overall
company
revenue falls
5%-8%
14%SPENDING
DROP
14%
directlyaffected
17%
13%
18%
15%
Drop among consumers who stop spending Drop among consumers who reduce spending

Data Misuse Causes Similar Economic Damage in the US and Europe
European consumers have a slightly harsher reaction to data misuse than those in the US
US Europe
Year 1Time of misuse
Time of misuse
Time of misuse
Time of misuse
Year 2
After
2 years
Spendingreduction(%)
DIRECTLY AFFECTED
Spendingreduction(%)
INDIRECTLY AFFECTED
DIRECTLY AFFECTED
INDIRECTLY AFFECTED
…stopped spending …reduced spendingTotal original revenue lost because consumers...
Year 1 Year 2
After
2 years
Spendingreduction(%)Spendingreduction(%)
10
20
30
10
20
30
Year 1 Year 2
After
2 years
10
20
30
Year 1 Year 2
After
2 years
10
20
30

% WHO CONSIDER THE DATA TYPE MODERATELY OR EXTREMELY PRIVATE
Note: Survey question: “How private do you consider the following types of personal data? Answer using a scale from 1 to 5, where 1 means ‘Not at all private’
and 5 means ‘Extremely private.’”
DATA TYPE
Credit card
Financial information
Tax information
Information about children
Health or genetic information
Information about spouse
Exact location
Dialed phone numbers
E-mail
Surﬁng history
Planned purchases
Important dates
Purchase history
Social network activity
Media usage
Products viewed online
Name
Interests
Age and gender
Brand preferences
Frustrations with products
30100 70 905020 40 60 80 100
ITALY UK US SPAIN FRANCE GERMANY
84 79 79 81 89 85
86
83
77
77
78
67
76
48
66
47
55
52
53
50
42
40
43
37
34
32
87
83
81
78
78
67
77
54
64
44
48
53
54
42
39
46
32
31
22
32
79
72
75
71
69
58
66
45
52
41
43
40
43
38
32
32
47
29
22
32
78
77
70
67
63
59
58
53
47
45
44
43
40
35
32
32
30
30
23
22
78
72
70
65
59
54
60
50
48
46
45
42
38
35
33
26
29
29
24
26
83
70
74
68
67
46
65
42
50
33
34
32
40
32
26
28
32
22
15
25
Consumers Are Sensitive to Data Misuse in Both the US and Europe
Financial, family, and health data are considered the most important to safeguard

Consumer Concern Varies Widely by Industry
Uses by ﬁnancial, technology, and government organizations elicit the most concern
Note: Survey question: “Are you concerned about any of the following types of companies or organizations sharing your private data? Identify those you are
concerned about.”
SPAIN US FRANCE
GERMANY UK ITALY
1.0
1.1
1.1
1.2
1.2
1.2
1.5
1.6
1.9
2.7
2.6
2.1
2.1
2.1
1.9
0.9
1.0
1.1
1.1
1.2
1.2
1.5
1.6
1.7
2.4
2.4
2.3
1.9
1.9
1.8
0.8
0.9
0.9
1.0
1.0
1.0
1.2
1.4
1.5
2.0
1.7
1.6
1.6
1.5
1.5
0.4
0.4
0.4
0.4
0.6
0.7
1.0
1.1
1.3
1.9
1.8
1.7
1.7
1.6
1.6
0.6
0.7
0.8
0.8
0.9
1.0
1.1
1.3
1.4
2.4
2.3
1.7
1.6
1.5
1.5
0.8
0.9
0.9
1.0
1.2
1.2
1.3
1.3
1.4
2.2
2.1
2.0
2.0
1.8
1.6
Credit card
Media Retail store Cable Loyalty program Airline/hotel Branded manufacturing Car manufacturing
Social media Government Banking Search engine Online retail Health insurance Mobile phone
INDEXED LEVEL OF CONCERN (1.0 = 25% OF CONSUMERS EXPRESS CONCERN ABOUT AN INDUSTRY)

All US Age Groups Are Concerned About Sharing Personal Data Online
Concern is increasing at the fastest rate among younger millennials
Sources: BCG Global Consumer Sentiment Survey 2013 and BCG Big Data and Trust Consumer Survey 2015.
Note: Survey question: “How much do you agree or disagree with the following statement: ‘You have to be cautious about sharing personal information
online’? Answer using a scale from 1 to 5, where 1 means ‘Strongly disagree’ and 5 means ‘Strongly agree.’” The chart shows respondents who answered 4
(“Agree”) or 5 (“Strongly agree”).
71
Younger millennials
(18–24)
Older millennials
(25–34)
Gen-Xers
(35–49)
Baby boomers
(50–69)
Silvers
(70–74)
79 81 81 84
Millennials Nonmillennials
2013 2015
% OF CONSUMERS WHO AGREE THAT THEY HAVE TO BE CAUTIOUS ABOUT SHARING PERSONAL
INFORMATION ONLINE
+1
+5 +5
86% (2015 average)
83% (2013 average)
+0
85 87 92 86 91
+8

Consumers Are Primed to Suspect Data Misuse
Distrust is high among those in the US and Europe
Note: Survey question: “How much do you agree or disagree with each of the following statements? Answer using a scale from 1 to 10, where 1 means ‘Do not
agree at all’ and 10 means ‘Agree completely.’” The charts show respondents who answered 8, 9, or 10 to the following survey prompts: “Companies don’t tell
you how they really use the personal data they collect” (left) and “I trust companies and organizations to do the right thing with the data they collect” (right).
% OF CONSUMERS WHO THINK COMPANIES
AREN’T BEING HONEST ABOUT DATA USE
% OF CONSUMERS WHO TRUST COMPANIES TO
DO THE RIGHT THING WITH PERSONAL DATA
SPAIN UK GERMANY US ITALY
62
57
53 51
48 48
FRANCE ITALY SPAIN UK US GERMANY FRANCE
25 24 22 21 18
14

Distrust Drastically Limits Access to Consumer Data
Consumers oﬀer much less data about themselves when they do not trust a company
% OF CONSUMERS WHO WOULD ALLOW A COMPANY THAT THEY DO NOT TRUST TO USE DATA ABOUT THEM
Note: Survey question: “How much do you agree or disagree with each of the following statements? Answer using a scale from 1 to 10, where 1 means ‘Do not
agree at all’ and 10 means ‘Agree completely.’” The charts show respondents who answered 8, 9, or 10 (likely to allow); 4, 5, 6, or 7 (neutral); and 1, 2, or 3
(unlikely to allow).
Likely to allow Unlikely to allowNeutral
SPAINUS
6
15
79
6
18
76
6
19
75
7
18
75
FRANCE ITALY UK GERMANY
8
18
74
7
22
71

Generating Trust Increases Access to Data by at Least Five Times
Trust continues to unlock access to consumer data
Sources: BCG Global Consumer Sentiment Survey 2013 and BCG Big Data and Trust Consumer Survey 2015.
Note: The exhibit shows survey responses that are comparable for the purposes of demonstrating the eﬀect of trust on consumers’ willingness to share personal
data. Survey question (green): “If I had the ability to prevent the harmful uses of data, I would be more willing to let companies use data about me.” Included are
the responses “Agree” or “Strongly agree”—that is, those consumers who are willing to share data when they can trust that the potential harm will be mitigated.
Survey question (red): “Data should be used by a company only for the purpose for which it was collected.” Included are the responses “Disagree” or “Strongly
disagree”—that is, those consumers who are willing to share data even when they cannot trust the data will not be used in contexts in which it could cause harm.
% OF CONSUMERS WHO WOULD BE WILLING TO ALLOW COMPANIES TO USE DATA ABOUT THEM
With trust Without trust
SPAIN UK GERMANY US ITALY SPAIN UK US GERMANYFRANCEFRANCE ITALY
2013 2015
72
66 66
53
68
60 58 57 55
50
59 57
62
3
+59
7
58
3
+51
3 4 2 44 3 5
108 6 77

But Data Stewardship Is Critically Flawed at Many Companies
Consumer expectations are disconnected from company practices
Data use and
collection practices
COMPANIESCONSUMERS
Transparency about
current practices
Notiﬁcations and permissions
for new data uses
Internal policies
and procedures
0101
0101010
0101010
1010101
010
010
101
01010
10
1010101010
01010101
101
Source: BCG.

Consumers Don’t Understand How Companies Actually Use Data
Consumers overestimate how often third parties use personal data
COMPANIES USE PERSONAL DATA TO MARKET
PRODUCTS AND SERVICES FROM OTHER COMPANIES
COMPANIES ALLOW OTHER COMPANIES TO
USE DATA ANONYMOUSLY
COMPANIES ALLOW OTHER COMPANIES TO
USE DATA LINKED TO A NAME
% of companies that use data in the ways above
% of consumers who believe companies engage with third parties in these ways
Sources: BCG Big Data and Trust Consumer Survey 2015 and BCG Big Data and Trust Company Survey 2015. The 2015 Company Survey surveyed 140
companies in eight industries.
Note: Survey questions: “How does your company use this customer data?” and “How do you believe these companies use your personal data?”
∆5 percentage points
4 19
2111
21 26

Companies Are Being Recklessly Conservative About Data Usage
Companies are failing to use data for new purposes that are acceptable to consumers
Sources: BCG Big Data and Trust Consumer Survey 2015 and BCG Big Data and Trust Company Survey 2015.
Note: Survey questions: “For each of these new uses, what do you believe your company must do to gain customer consent to use the data?” and “Which
approval should an organization have from you for the following uses?”
TYPE
OF
USE
Internal
improvement
Personalization
of oﬀers
Marketing of products
from third parties
Anonymous use
by third parties
Nonanonymous
use by third parties
% who believe companies can use consumer data for the stated purpose if consumers are properly engaged
% who believe companies cannot use consumer data for the stated purpose regardless of consumer engagement
88
12
92
Consumers
Companies
8
80
20
90
10
Consumers
Companies 80
20
50
50
Consumers
Companies
73
27
39
61
Consumers
Companies
54
46
79
21
Consumers
Companies
–34
–25–30
–10
–4

Companies Are Not Being Transparent with Consumers About Data Use
They are recklessly disregarding the notifications and permissions that consumers want
Note: Survey questions: “For each of these new uses, what do you believe your company must do to gain customer consent to use the data?” and “Which
approval should an organization have from you for the following uses?”
44
56
60
40
94
6
94
6
68
32
74
26
60
40
93
7
88
12
85
Consumers
Companies
Consumers
Companies
Consumers
Companies
Consumers
Companies
Consumers
Companies
15
% who believe companies should use opt-in or opt-out permission, notification, or payment to engage
consumers before using data for the stated purpose
% who believe companies do not need to take any action before using data for the stated purpose
Internal
improvement
Personalization
of offers
Marketing of products
from third parties
Anonymous use
by third parties
Nonanonymous
use by third parties
–20
–33
–26
–28
–41
TYPE
OF
USE

Companies Are Failing to Properly Engage Their Customers
Companies overwhelmingly rely on “pull” rather than “push” communication methods
PULL
COMMUNICATION
METHODS
Source: BCG Big Data and Trust Company Survey 2015.
Note: Survey questions: “With regard to communicating your company’s privacy policies to customers, which of the following statements are true?”; “With
regard to engaging with customers about the data your company holds about them, which of the following statements are true?”; and “With regard to engaging
with customers about how you use their data, which of the following statements are true?”
PUSH
COMMUNICATION
METHODS
% OF COMPANIES
MAKING THEIR PRIVACY
POLICIES AVAILABLE
% OF COMPANIES
EXPLAINING CUSTOMER
DATA THEY HOLD
% OF COMPANIES
EXPLAINING HOW THEY
USE CUSTOMER DATA
If contacted by
customer
Available on
website
Through
regular letters
Through
regular e-mails
Through
update letters
Through
update e-mails
Does not
apply/not
available
@
@
62
0
0
16
15
14 38 33
8 6
6 5
0
0
8
4
2420
41 44 49

REASONS RESPONDENTS DO NOT READ PRIVACY POLICIES
Too long/complex Too much legal
language
Don’t believe
companies are
honest
No time to keep
up with policies
Don’t understand
the policies
Privacy policies
change too often
Have no control
so don’t bother
Don’t know where
to find privacy
policies
Don’t know that
privacy policies
are public
Don’t care how
personal data
is used
Other
66% 52% 34% 33%
9% 6% 3% 2%
26% 23% 16%
If offered a “short, clear, and
easy-to-understand” synopsis of
the full privacy policy,
56%of consumers would do more
business with a company.
Note: Survey questions: “What are the major reasons you tend not to read these privacy policies?” and “If a company whose services or products you use were to
offer a short, clear, and easy-to-understand policy regarding how it uses your personal data, how much would this influence you to do business with that company?”
Consumers Do Not Read Privacy Policies
Plain-language versions of privacy documents can increase consumer spending

A Knowledge Gap Exists Between Companies and Consumers
Companies think that more consumers understand data stewardship practices as really do
% OF CONSUMERS WHOM COMPANIES THINK
UNDERSTAND DATA STEWARDSHIP PRACTICES
% OF CONSUMERS WHO SAY THEY UNDERSTAND
COMPANY DATA STEWARDSHIP PRACTICES
Note: Survey questions: “Are you aware of the privacy policies that describe how the companies you deal with treat your consumer data?”; “Have you read the
privacy policies of the companies you deal with?”; “Do the companies you deal with list (online or in paper form) the data they collect about you?”; “Do you
know which private data the companies you deal with have access to?”; and “To the best of your knowledge, what percentage of your customers are aware of
your privacy policy, the data your company holds about them, how your company uses the data you hold, and new uses of data?”
40
20
15
10
40
36
30
24
Are aware
of a privacy
policy
Are aware
of the data
a company
holds
Are aware
of how data
is used
Are aware
of new uses
of data
Are aware
of a privacy
policy
Have read a
privacy
policy
Are aware
of the types
of collected
data
Understand
the data a
company has
access to

No
Don’t know
Yes
EXISTENCE OF AND RESPONSIBILITY FOR PRIVACY POLICIES BY INDUSTRY (%)
Note: Survey questions: “Has your company established a privacy policy that explains how you collect, manage, and use customer data?” and “Who has been
responsible for determining the privacy policy?”
Few Companies Have Senior-Executive-Level Oversight of Privacy Policies
Responsibility is vested in IT and legal instead
FINANCIAL INSTITUTION
HEALTH CARE TECHNOLOGY, MEDIA,
AND TELECOM
COMPANIES THAT
SELF-IDENTIFY AS
“BEST IN CLASS”
CONSUMER
Does your company have
a privacy policy?
C-suite / line executives
IT / legal / privacy ofﬁce
Other
If yes, who is responsible
for this privacy policy?
INSURANCEOVERALL
16
8
76
22
73
5
24
12
64
19
75
6
6
94
19
75
6
17
11
72
23
77
0
4
14
82
22
72
6
12
16
72
28
67
5
27
91
28
65
7

Note: Survey questions: “Has your company established a set of guiding principles for how to use customer data that are separate and distinct from the
privacy policy?” and “Who has been responsible for determining the guiding principles?”
Few Companies Have Guiding Principles for Data Privacy
Senior executives must be actively involved in developing internal best practices but often are not
EXISTENCE OF AND RESPONSIBILITY FOR GUIDING PRINCIPLES BY INDUSTRY (%)
No
Don’t know
Yes
FINANCIAL INSTITUTION
HEALTH CARE TECHNOLOGY, MEDIA,
AND TELECOM
COMPANIES THAT
SELF-IDENTIFY AS
“BEST IN CLASS”
CONSUMER
Does your company have
guiding principles separate
from a privacy policy?
C-suite / line executives
IT / legal / privacy ofﬁce
Other
If yes, who is responsible for
these guiding principles?
INSURANCEOVERALL
34
12
54
34
59
7
16
48
42
50
8
6
76
23
69
8
39
11
50
45
44
11
9
36 36
55
33
67
0
16
7
77
41
53
6
18
36
16
48
42
50
8

Companies Don’t Know If Consumers Trust Them
And they may not deserve that trust because of weak internal enforcement mechanisms
Note: Survey questions: “With regard to your company’s approach to measuring customer trust, which of the following statements are true?” and “With regard
to your company’s approach to ensuring compliance with its privacy rules, which of the following statements are true?”
% OF COMPANIES THAT MEASURE CONSUMER
TRUST THROUGH THE FOLLOWING ACTIVITIES
% OF COMPANIES THAT ENFORCE DATA PRIVACY
THROUGH THE FOLLOWING ACTIVITIES
Assess
indirectly
through
market
research
Assess
indirectly
through
repeat
business
Doesn’t
apply/
do not
measure
trust
Have tried
to measure
but don’t
do it
regularly
Publish
trust
metrics
Have
trust
metrics
Strongest mechanism Weakest mechanism
Create
access-
based
protocols
Create
training
programs
Create/
enforce
rules
after
the fact
Assess
risk
annually
Monitor
in real
time
Other Doesn’t
apply/no
system
in place
Strongest mechanism Weakest mechanism

Bridging the Trust Gap: Data Misuse and Stewardship by the Numbers

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