As modern businesses grow, they need to collect data from their existing and potential customers to optimize their operations and service delivery. However, data collection and processing activities always remain at risk of violating privacy principles and frameworks, which results in a loss of consumer trust and potential regulatory penalties. This is especially true when more consumer data than necessary is collected, processed, or stored.
Whether your business operates in Europe, the United States, or other geographic regions, data minimization can help significantly reduce privacy risks to your customers’ data (and associated compliance risks).
So, what is data minimization?
This blog will break down the principles of data minimization and how they apply to your business and affect your data privacy vs data security goals.
Data Minimization Explained
The data minimization definition boils down to implementing data collection, processing, and retention practices that are driven by and restricted to a specified purpose, which ultimately relies on understanding data collection objectives vis-a-vis business needs.
However, implementing a data minimization strategy does not exclusively involve reducing how much consumer data you collect, process, or retain; it also extends to the data privacy principles along which your business operates day to day, which can include making customers decide to opt out or opt in when providing personal information or consent.
What is Data Minimization?
Data minimization refers to collecting only the data necessary for completing business tasks.
This means that an organization implementing data minimization principles must ensure that the data collected, processed, or retained does not exceed business needs and is justified by the reasonable, “proportional” purposes for which it processes consumers’ data.
Data minimization is emphasized in the internationally-recognized Fair Information Practice Principles (FIPPs) and has been codified in Europe’s data privacy regulations, particularly the General Data Protection Regulation (GDPR). Article 5(1)(c) of the GDPR defines data minimization as the process of limiting the collection, processing, or retention of subjects’ personal data to the “purposes for which they are processed.”
However, data minimization is not exclusive to the EU’s framework. Nearly all privacy regulations—such as the California Privacy Rights Act (CPRA)—contain similar minimization language and requirements.
In other words, your business should only collect, process, or retain the data explicitly required to achieve your defined business objectives. Interacting with more data than is necessary immediately exposes your organization to elevated privacy (and cybersecurity) risks. As a result, that increased exposure also further complicates data privacy compliance obligations.
Why is Data Minimization Important?
Meeting compliance obligations (and avoiding penalties and fines) is always an effective motivational tool for businesses, but is data minimization important for other reasons? It absolutely is.
At the most fundamental level, the greater quantity you have of something, the more complex managing and protecting it becomes. Even in digital environments, this remains true.
So, data minimization helps businesses:
- Determine what data to collect, process, and store
- Determine whether additional, unnecessary data is included in those activities
- Limit the amount of sensitive data categories requiring increased compliance burdens
- Ensure operations and various processes adhere to defined scopes
- Reduce how much time data management, privacy, and security responsibilities take
- Reduce privacy risks and compliance burdens overall
- Reduce operational costs (e.g., cloud storage requirements) and data disorganization
Furthermore, consumers are increasingly aware of and concerned with the efforts businesses take to respect their privacy—particularly regarding their personal data. And by minimizing the personal information collected, processed, or stored, businesses cultivate greater consumer trust and loyalty.
Data Minimization Use Cases—Sensitive Data Categories, Automated Collection, and Retention
Although there are myriad use cases illustrating the importance of data minimization, three examples are particularly apt:
- Most privacy laws and regulations distinguish between standard categories of personal data and “sensitive categories,” requiring elevated protection and consideration before and during any collection, processing, or storage. Failing to meet the elevated requirements for handling this data increases privacy risks, compliance burdens, and violation consequences but minimizing the data collected, stored, or processed helps avoid these issues. Sensitive data generally includes categories such as:
- Government IDs (e.g., passport number, Social Security Numbers)
- Precise geolocations
- Race, religion, or union memberships
- Genetic, biometric, and some health information
- Messaging contents and browsing history
- Financial account or card numbers when paired with account credentials
- Businesses that collect personal data from consumers via automated means may inadvertently collect more than necessary. Sifting through these large, disorganized data repositories for day-to-day activities and compliance needs without defined criteria for retention or disposal is especially challenging.
- Data minimization helps identify data that may have been retained longer than necessary or collected unnecessarily. If storage duration exceeds a reasonable length and there’s no valid reason to continue retaining consumers’ personal data, your business is better off deleting it and limiting future data collection events to only the data required for business tasks.
With an established data minimization process, your business can limit how much data—standard or sensitive—it collects from consumers and streamline operations, especially with respect to ongoing management and compliance obligations.
Benefits of Data Minimization
Aside from the reasons listed above for why data minimization practices are important, other potential benefits include:
- Streamlined data searches – The more irrelevant details you have in your data repositories, the more difficult it is to find crucial data. For instance, if your business collects data from various subjects based on eligibility criteria, retaining data that falls outside of these criteria will likely complicate future searches.
- Maximized internal bandwidth – If your staff is constantly sifting through large amounts of user data to identify unnecessary data for deletion, a data minimization strategy can help reclaim their bandwidth. Data minimization limits the amount of downstream work required to filter data before processing and serves as information management to delete excess data collected from consumers. It also defines the standard operating procedure to follow when doing so.
- Customer request fulfillment – Privacy regulations (e.g., data minimization GDPR, CPRA) generally provide customers with the right to request the modification or deletion of their personal data within your systems. Data minimization helps reduce request instances and better enables professionals to find and correct or delete data. Also, faster fulfillment of customer requests directly demonstrates that you prioritize their privacy and concerns.
Most importantly, implementing data minimization principles year-round reduces the chances of your business failing to comply with privacy regulations. Failure to meet data privacy requirements can result in criminal violations along with potential fines, penalties, and litigation.
Data Minimization Across Privacy Frameworks Like the GDPR
Besides the GDPR, data privacy regulations currently active across the United States require businesses to implement data minimization principles.
Although these requirements may vary with each regulation, businesses are expected to protect consumer data privacy when collecting, processing, or retaining sensitive personal information and data.
California Privacy Rights Act (CPRA)
Of the privacy regulations in the United States, the CPRA has one of the most defined data minimization requirements. Whereas these requirements were not extensively defined in the California Consumer Privacy Act (CCPA), the CPRA emphasizes the need to limit unnecessary data collection and processing.
Under the CPRA, businesses are required to notify consumers about:
- How long consumers’ data will be processed or retained
- Why each category of data will be processed or retained
CPRA compliance means your business provides these notices to consumers before or at the point of data collection. And restricting activities based on the purposes stated helps minimize any collection of unnecessary data that would then be prone to or increase privacy risks.
Per the CPRA, you must also delete sensitive consumer data once it is no longer required to achieve business objectives.
Virginia Consumer Data Protection Act (VCDPA)
The VCDPA requires businesses to limit the collection and processing of consumers’ personal data to that which is “adequate, relevant, and limited to what is necessary in relation to the specific purposes listed” within the regulation.
Compliance with the VCDPA’s data minimization requirements also means that businesses must keep data processing “reasonably necessary and proportionate to the purposes listed” for collection.
Businesses are also responsible for sharing the purposes of data processing activities with consumers and tracking how consumer data is collected, processed, or retained.
Colorado Privacy Act (CPA)
The CPA’s data minimization requirements are similar to those in the VCDPA, requiring businesses to limit sensitive data collection to that which is “reasonably necessary” and ensure it is adequate and relevant to the purposes for which the business collects it.
Connecticut Data Privacy Act (CDPA)
Like the laws explored above, the CDPA outlines similar data minimization requirements for businesses that collect personal data from consumers.
Data collection must be limited to “what is adequate, relevant and reasonably necessary in relation to the purposes for which such data is processed, as disclosed to the consumer.” Once consumers’ personal data is collected, businesses must implement reasonable safeguards to mitigate privacy risks from compromising the data.
Utah Consumer Privacy Act (UCPA)
Data minimization requirement under the UCPA calls for businesses to specify why they collect data from consumers via a privacy notice. Businesses must also protect collected data using appropriate safeguards and reduce privacy risks from impacting data availability, integrity, or confidentiality.
Regardless of which privacy regulations apply to your business, data minimization will help you protect sensitive consumer data from privacy risks.
Implement Data Minimization with Datagrail
Adopting data minimization principles will help you continually meet your compliance obligations and protect your customer’s data privacy—differentiating your business as one committed to respecting individuals’ privacy and customer trust. But data minimization also enables your business to streamline all digital operations by preventing the accumulation of data detritus.
A strong data privacy foundation starts with knowing which data to collect, store, or process while remaining compliant with legal and regulatory requirements. And Datagrail’s platform can help you implement data minimization at scale.
Learn more about our privacy platform today.
Other Resources
- Implementing Privacy Solutions Across Your Ecosystem
- Honoring Data Privacy in the Age of Personalization
Sources:
California Legislative Information. California Privacy Rights Act of 2020. https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?division=3.&part=4.&lawCode=CIV&title=1.81.5
Colorado General Assembly. Colorado Privacy Act. https://leg.colorado.gov/sites/default/files/2021a_190_signed.pdf
EU GDPR. GDPR Article 5. https://gdpr-info.eu/art-5-gdpr/
EU GDPR. GDPR Article 9. https://gdpr-info.eu/art-9-gdpr/
IAPP. Fair Information Practice Principles. https://iapp.org/res,ources/article/fair-information-practices/
IAPP. New categories, new rights: The CPRA’s opt-out provision for sensitive data. https://iapp.org/news/a/new-categories-new-rights-the-cpras-opt-out-provision-for-sensitive-data/
ICO. Principle (c): Data minimisation. https://ico.org.uk/for-organisations/guide-to-data-protection/guide-to-the-general-data-protection-regulation-gdpr/principles/data-minimisation/
State of Connecticut. Public Act No. 22-15 – An Act Concerning Personal Data Privacy and Online Monitoring. https://www.cga.ct.gov/2022/ACT/PA/PDF/2022PA-00015-R00SB-00006-PA.PDF
Utah State Legislature. Utah Consumer Privacy Act. https://le.utah.gov/~2022/bills/sbillenr/SB0227.pdfVirginia’s Legislative Information System. Code of Virginia – Chapter 53. Consumer Data Protection Act. https://law.lis.virginia.gov/vacodefull/title59.1/chapter53/