Importance of proper personal data processing in business and role of data controller

By Dennis AKWABOAH

In today’s digital age, businesses across industries handle vast amounts of personal data from customers, employees, and partners. This data is vital for operations, marketing, customer service, and decision-making. However, with this privilege comes the serious responsibility of managing personal data in a secure, lawful, and transparent manner.

Processing personal data improperly not only exposes businesses to legal risks but can also damage their reputation, undermine consumer trust, and lead to costly financial consequences. The role of the Data Controller in ensuring that personal data is processed properly cannot be overstated. This article explores the critical importance of proper data processing, and the responsibility businesses have under data protection laws, particularly the Data Protection Act, 2012 (Act 843) in Ghana.

What is personal data processing?

Personal data processing refers to any operation or set of operations performed on personal data, whether by automated means or otherwise. This can include the collection, storage, modification, retrieval, dissemination, or erasure of personal information. Given the sensitive nature of personal data, laws and regulations such as the Data Protection Act, 2012 (Act 843) in Ghana sets strict guidelines on how personal data should be handled.

Under these regulations, personal data processing must be transparent, lawful, and for specific, legitimate purposes. Businesses are required to obtain the consent of individuals (data subjects) before processing their data unless the processing is justified by legal or contractual obligations, public interest, or the legitimate interests of the data controller or a third party.

Why proper data processing is crucial

1. Legal compliance: Data protection laws are designed to ensure the privacy and security of personal data. Non-compliance can result in hefty fines, penalties, and compensation claims. In Ghana, the Data Protection Act, 2012 (Act 843) mandates that data controllers and processors adopt technical and organizational measures to prevent the unauthorized use of personal data. Failing to adhere to these provisions can result in severe consequences, as demonstrated by the Adentan Circuit Court’s recent decision, where a company was held liable for improper processing of a customer’s data.
2. Customer trust and reputation: Trust is a cornerstone of any successful business. Customers trust companies with their personal data, often without fully understanding the risks involved. Mishandling data can lead to breaches that damage customer relationships and erode brand reputation. With increasing consumer awareness around privacy rights, businesses that fail to protect personal data can lose consumer confidence and face significant reputational damage.
3. Preventing identity theft and fraud: One of the key risks of improper data processing is the potential for identity theft and fraud. When personal data is not adequately protected, malicious actors can exploit it for unlawful purposes. This places individuals at risk and creates legal liabilities for businesses. Implementing robust verification systems and security checks, especially in industries like financial services and digital platforms, is essential to mitigate these risks.
4. Operational efficiency and data integrity: Proper data processing ensures that personal data is accurate, up-to-date, and relevant for the purposes it was collected. Inaccurate or incomplete data can lead to inefficiencies, mistakes in service delivery, and loss of revenue. Businesses that prioritize data integrity are better positioned to make informed decisions, provide excellent customer service, and maintain efficient operations.

The role of the data controller

At the heart of responsible data processing is the Data Controller, the entity or individual who determines the purposes and means of processing personal data. The Data Controller has a legal obligation to ensure that personal data is handled in accordance with the law and must take reasonable steps to protect the data from unauthorized access, modification, or disclosure.

Key responsibilities of the data controller:

1. Ensuring lawful processing: The Data Controller must ensure that personal data is processed lawfully, fairly, and transparently. This means obtaining consent from data subjects or ensuring that there is a valid legal basis for processing the data, such as contractual necessity or legal obligations.
2. Data minimization: Data controllers should only collect personal data that is necessary for the specific purpose at hand. Over-collection of data increases the risk of exposure and raises legal questions about the necessity of processing excess information.
3. Security measures: The Data Protection Act mandates that Data Controllers take appropriate security measures to protect personal data from loss, damage, or unauthorized access. Section 28 of the Data Protection Act requires controllers to assess potential risks and establish safeguards to protect data. Regular verification of these safeguards is critical to ensuring they remain effective against new and evolving threats.
4. Accountability for data processors: Many businesses engage third parties, known as Data Processors, to handle certain data-related activities. Under Section 30 of the Data Protection Act, the Data Controller is responsible for ensuring that these Data Processors comply with the same security and privacy standards. The Controller must also enter into formal contracts with the processors to guarantee that data is handled in line with the law.

The risks of non-compliance

The failure to process personal data properly can lead to significant legal and financial consequences. In Ghana, Section 43 of the Data Protection Act entitles individuals to seek compensation if they suffer damage or distress as a result of a data controller’s non-compliance. Businesses found to have negligently processed personal data can be held liable for damages, as seen in recent legal rulings.

For instance, the Adentan Circuit Court’s decision against Bolt Holdings OU, which failed to properly verify an identity used in their ride-hailing service, shows the importance of adhering to data protection laws. This case serves as a cautionary tale for all businesses that handle personal data, especially in environments where digital platforms rely on personal identification.

Best practices for proper data processing

To mitigate the risks associated with improper data processing, businesses should adopt the following best practices:

1. Regular data audits: Conduct regular audits of your data processing activities to ensure compliance with legal requirements. This includes reviewing how personal data is collected, stored, and shared.
2. Data protection training: Educate employees and data processors on data protection principles and the importance of safeguarding personal information. This will help minimize human error, which is a common cause of data breaches.
3. Implementing strong security measures: Use encryption, access controls, and other security measures to protect personal data from unauthorized access. Regularly update security protocols in response to new threats.
4. Obtaining informed consent: Ensure that individuals are fully aware of how their data will be used and have given explicit consent before collecting or processing their data. This promotes transparency and fosters trust.
5. Data minimization: Only collect the data necessary for the specific purposes of your business. Avoid excessive data collection that may increase your liabilities in case of a breach.

Conclusion

The proper processing of personal data is not just a legal obligation; it is a business imperative in today’s data-driven economy. Businesses must ensure that they comply with data protection laws, such as the Data Protection Act, 2012 (Act 843), and take all necessary steps to protect personal information from unauthorized access or misuse.

The Data Controller plays a critical role in this process, bearing the ultimate responsibility for the security and lawful use of personal data.

By adopting strong data protection measures and embedding a culture of privacy within their operations, businesses can safeguard themselves against legal risks, protect customer trust, and ensure the integrity of their data practices.

>>>the writer is an Associate at Sustineri Attorneys PRUC with its Technology and Emerging Innovations, Corporate, Tax and Trade Practice Group, specializing in legal service provision for Startups and SMEs, Fintechs, and other Technology companies. He welcomes views on this article via [email protected]

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