Why building consumer trust is vital in an age of data-driven innovation

March 15 is celebrated as World Consumer Rights Day and also as the National Consumers Day in India and many other countries. This day was chosen as John F. Kennedy, then US President, had submitted the Consumer Bill of Rights to the US Congress in 1961. The bill affirmed consumer rights as an inalienable part of the national economy. Since 1983, at the behest of Consumers International, governments and non-government organisations around the world have been observing the same with one or the other vital theme to attract the attention of people and policymakers. The theme to mark this year’s celebrations is “Trusted Smart Products”.

In the age of Industry 4.0, more commonly referred to as the fourth industrial revolution, it becomes important to bring forth a consumer perspective on the evolving data-driven digital technologies, to create better awareness in interacting with such technologies. After all, consumers are the raison d’etre of all economic activity, whether driven by steam or electricity or data. The digital economy, which is driven by and generates data, has to put the consumer at the heart of the calculus so that they develop trust in the new-fangled system.

It has been estimated that there are 23 billion (approximately) smart products in the world, that is, those that are capable of being connected to the Internet to receive, collect and send data. Such products include smartphones, wearable fitness trackers, smart TVs, voice-activated assistants, etc. Fuelled by the personal data of consumers, these innovative products have found their way into the homes of consumers, and blended with their day-to-day life and often become indispensable.

The multiple number of devices used by affluent consumers for availing digital technology services, such as computers and smartphones, as well as tablets and other smart products are testament to the growing significance digital technologies hold in their lives. Although emerging and innovative technologies such as Internet of Things (IoT), Artificial Intelligence (AI), Blockchain, etc hold promise to bring many more benefits to consumers, the associated data privacy concerns may hamper consumer trust on them.

Consumer perception surveys conducted by CUTS in India have repeatedly highlighted the willingness of consumers, both in urban and rural areas, to using data-driven digital technologies, such as social media, communications, entertainment, etc. Various perceived benefits received by consumers from technologies in terms of time and cost-saving, ease and convenience of access, etc have been the driving factors of their increased usage.

As technologies evolve, these products are envisaged to bring more benefits to consumers, ranging from access to new services, to more responsive products, along with greater convenience, personalised services and choice.

Our surveys have also highlighted that consumers are generally comfortable in sharing their personal data with service providers for multiple purposes, which also includes “better and improved services”; innovation in other words. However, there also exists scepticism in their minds in regard to the allied risks of data-sharing with service providers of these services, such as: misuse or misappropriation of data, excessive data collection, and data not being protected at the end of service providers.

Low levels of awareness about grievance redressal in case of misuse of data by service providers, coupled with the lack of capacity of consumers in taking steps to protect their data, and blurred clarity on accountability may also dent consumer trust on data-driven technologies. Furthermore, the opacity maintained by service providers in their practice of using, curating and monetising data should also be areas of concern for the government and civil society groups alike, especially considering the right to privacy (including informational privacy) being a fundamental right.

Studies have shown the adverse impacts on consumer trust, thereby affecting uptake of digital services in case of data breaches, or lack of data protection at the service providers’ end. It may therefore be said that service providers of smart products and services need to uphold data privacy for their products and services to become “trusted smart products”. The government would also need to ensure framing of optimal consumer data protection frameworks in order to foster trust among consumers for sharing their data with service providers, which may not be the case always as many countries, including India, are yet to come to grips with the issue of personal data protection.

There are other challenges as well looming over the enhanced proliferation of smart products among consumers, which include lack of access due to weak or no digital infrastructure, poor digital skills, lack of affordability, especially amongst rural consumers. Such barriers also inhibit the sophisticated use of digital technologies. These need to be overcome through the collaborative efforts of the government, service providers and civil society organisations, etc.

It is therefore important to enshrine consumer rights in the design of upcoming data-driven technologies. Apart from other consumer rights such as: the right to safety, right to choose, right to information and the right to be heard, etc, right to data privacy also needs to be upheld.

This World Consumer Rights Day should be a reminder to all relevant stakeholders, to deliver real impact for consumers in the age of data-driven innovation. This may be done by engaging in awareness and capacity-building exercises for consumers, on the pain points discussed above. This will help foster consumer trust on data-driven digital technologies, thereby enabling their uptake and availing the associated benefits.