Two thirds of consumers don't fully understand how businesses collect and use their data

Deloitte report suggests awareness of how information is used is declining as use of technology increases

Businesses are collecting more information about individuals than ever, but almost two thirds of people aren't aware what data about them is being collected or don't know it's being collected at all.

That's according to a Deloitte report, Data Nation 2013: Balancing growth and responsibility, which examined British people's attitudes to data collection by both public and private sectors. It found that just 35 per cent of people are fully aware about how their information is collected and used by businesses, representing a ten per cent decline compared with last year.

The research, carried out by Ipsos MORI on behalf of Deloitte, suggests that the collection of new types of data from sources including smartphones and social media is to blame for the decline in awareness of about how the enterprise uses data in attempt to personalise offers and services.

"Companies are collecting more data and combining increasing varieties of information, revealing relationships that are extraordinarily valuable to businesses," said the report.

"However, people's level of awareness is not keeping up with the new ways that data is collected and used. The scale of data collection or the relationships that can be determined from it are not always adequately explained to the people who feature in the data."

Perhaps worryingly, it's those who generate the most data and leave the biggest digital trails – the so-called Generation Y (18-34 year olds) and Generation Z (15-17 year olds) – who have the least idea about how it's collected and used. Almost one in three individuals in these age groups believe organisations collect little or no data about them, despite use of items and services such as social network accounts, credit cards and online shopping.

Much of this is down to users ignoring privacy policies that explain how their data is collected, with 57 per cent of internet users admitting they ignore notices about cookies or that they don't even see them. Even for those who do read privacy policies, it's unlikely that they'll take all the information in, with Deloitte's research suggesting the average privacy policy takes 25 minutes to read, which would require an average of 31 hours reading time for a year on the web.

Two thirds of consumers don't fully understand how businesses collect and use their data

Deloitte report suggests awareness of how information is used is declining as use of technology increases

"The British public is still not confident in how companies use and handle their personal data," said Harvey Lewis, Deloitte Analytics research director.

"Organisations need to make it easier for individuals to understand why this information is collected and what benefit they will receive. Businesses are more likely to get maximum benefit from data if every customer interaction is based on the principles of transparency, trust and informed dialogue."

The report also examined company policies to find out their views on sharing data, revealing ten per cent are happy to share personal information about customers with another organisation, while 22 per cent are willing to share it with public sector organisations. This rises to 31 per cent if the data is used for something viewed as for the public good, such as medical research.

Overall though, the report suggests that the majority of people aren't confident in how businesses might manage personal data, with just 38 per cent of individuals sure that their information will be kept safe.

The report concludes that for businesses to gain a competitive advantage, they must make consumers aware of what data is being collected and how it's being used.

"Awareness of data collection and use and consumer rights are the greatest contributors to consumer confidence found in this research. To get maximum benefit from using data, ensure that every customer interaction is based on the principles of transparency, trust and informed dialogue," it said.