How data anonymization allows you to stay compliant with GDPR

Business tips

Data protection has been a hot subject recently, especially because several companies dealt with serious data breaches and faced the associated consequences. Properly safeguarding information is therefore crucial for businesses. They must change the way they handle sensitive data to protect their clients’ privacy and strengthen the users’ rights. The European General Data Protection Regulation (GDPR), adopted on May 25th, 2018 is a step in this direction because it provides internet users with strengthened rights and harmonizes the level of data protection across European countries.

Even if in the beginning some organizations perceived GDPR as too strict, compared to legislation from other jurisdictions, they soon understood that companies must handle sensitive data responsibly, especially in the present context when the number of data breaches is sky-rocketing. The regulation guarantees to internet users who entrust their personal information to European organizations that modern data protection regulations guard it. The GDPR asks organizations to remove or anonymize from their passive databases all personal information, such as names, phone numbers, addresses, birth names, and IPs. 

The companies that fail to comply with the European Union’s General Data Protection Regulation pay hefty fines for their violations. Since the adoption of the GDPR, the European authorities have fined companies over €158 Million in penalties, and we should highlight that these fines are only the beginning of the risks businesses assume if they don’t comply with the GDPR. And considering that the enforcement of the regulation shows no sign of slowing down if your company operates in Europe, you should consider anonymizing your sensitive data.

You don’t want to be a negligent or an accidental offender or create the impression that you don’t care for your customer’s privacy. Being compliant with GDPR shows your public that it can trust your brand and promotes loyalty. A responsible business owner should reinforce their company’s external defenses (encrypt data, obfuscate code, enhance firewall) and trust access to sensitive information to only a small number of employees. 

What is data anonymization?

Data anonymization is a technique of information sanitization that implies the removal and encryption of sensitive data. It aims to ensure the privacy of the internet users’ personal information and minimize the risk of leaks when data is moved from one database to another.

The General Data Protection Regulation requires organizations to anonymize or pseudonymize stored information of EU residents. Because anonymized data isn’t classified as sensitive information, it’s no longer subject to data protection regulations, and therefore companies can use it for broader purposes while following regulations and protecting their clients’ rights. Data anonymization is also a requirement of HIPAA, the US regulation governing the storage and use of sensitive data in the healthcare sector. 

Companies operating in sectors ranging from healthcare to financial, e-commerce and app development are required to anonymize their data. 

Why do organizations use data anonymization?

– Prevent cybercrime

– Improve resource allocation

– Speed up software development

– Gain market insight

– Improve data privacy

– Identify upsell opportunities

Data anonymization techniques

Organizations can use several methods and tools to disassociate personally identifiable information from their owners:

– Masking

– Pseudonymization

– Generalization

– Permutation/shuffling/swapping

– Perturbation

– Synthetic data

– Database firewall

– Data loss prevention

– Data discovery and classification

– Database activity monitoring

Impact of data anonymization

As seen above, there are several benefits of data protection and anonymization for companies and internet users. It’s not difficult to understand why it’s dangerous for data like personal information, health data, contact details, or account credentials to be available online for anyone to access. Even well-known names such as Google and Amazon have been the victims of data breaches due to anonymization errors. These instances made it vital for a data privacy regulation to be developed and enforced. 

However, even if many internet users express concern over data violations, they also require companies to personalize advertising and services according to their specific needs. This challenges companies because while ROI and on-page SEO KPIs can be tracked using de-identification tools, de-identified data cannot be used for advertising and service personalization.  

Use cases for data anonymization

Let’s see where the rubber meets the road and check how data anonymization serves organizations

It preserves private data during corporate collaboration

Sharing confidential information between organizations while complying with GDPR is challenging, but data anonymization allows them to hide the information that identifies the owner (name, phone number, age, etc.). Therefore, organizations can share valuable attributes without putting private data at risk. 

It offers retailers in-depth insight from customer data

Retailers need well-informed and specific data to get the most out of their clients’ information. But they often struggle to get their clients’ consent for accessing and leveraging sensitive information for market research. Anonymization removes personal data and unlocks only the information that allows retailers to make business decisions. 

It facilitates fraud detection in the financial industry

The GDPR requires organizations to obtain their customers’ consent before analyzing data. Data anonymization masks customer data sufficiently so financial companies can analyze it and use it to decrease fraud risk. 

It provides realistic data for software testing

Software testing is essential to delivering successful software projects and products. Developers need realistic data to test their tools because only it can uncover real issues. They can use automated tools to test their programs in the initial development phases, but they need real user behavior backed into real information during the final stage. However, the GDPR prevents them from using this data in its rough form. So, they have to mask and anonymize it before processing it. 

Final words

No matter the sector you’re operating in, you can take advantage of countless opportunities to unlock the value of customer data if you use data anonymization. Often, it implies removing the bits of data you don’t need for your specific purpose. However, other times it’s more challenging, and you need to use a masking or anonymization method to mix, change, and obfuscate information in a way that makes it almost impossible to recreate the sensitive data. 

Tech Digest Correspondent

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