Legal Aspects of Creating Customer Databases All Businesses Should Know

When a business wants to sell and market or create customer databases the legalities of the sale and marketing need to be considered. If a company is going to conduct both mail order and in-person sales, they need both types of lists. One that includes only names and addresses, while another may include additional information such as age, income, race, interests, hobbies, etc. Creating a list of people with certain characteristics is called segmentation. Which may be used to create lists for different types of mailings or even by geographic area – city, county – ZIP code. Although creating customer databases is legal and the first amendment protects your right to gather, use and disseminate information about individuals. Here are the legal aspects of creating customer databases.

Use Of Customer Data Platform

CDPs are an innovative technology that allows companies to centralize customer information, make it available across the enterprise, and act on the information in real-time by triggering automated workflows. Customer Data Platform can help businesses provide more personalized experiences for their customers when they visit websites, call support centers or engage with social media. CDPs have been around since the mid-2000’s when a partnership between IBM and Net-infrastructure (now part of TIBCO) led to the creation of a product called Smarter Commerce. The concept was embraced by some retail and other companies but was ahead of its time. Since then CDPs have been gaining ground as more IT departments have recognized the value of having a single customer data repository that can be tapped into from multiple business applications.

Adopt Telemarketing

Many businesses use databases to enhance sales. These systems allow companies to better select potential customers, target marketing efforts, and improve customer service. Creating a database has many benefits for any business. Companies that want to collect information about their customers will need the consent of those individuals before they can do so legally. There are many legal aspects that go into creating customer databases. Some of these laws may vary from state to state, but there are general legal guidelines that apply everywhere. The use of databases and the storage of personal information is regulated by federal and state law. Each state has passed laws that regulate private possession of personal information. 

However, if a business shares or sells its customer list to another company, then both businesses must abide by the regulations in the states from which they receive these lists. When a business obtains the consent of customers to use their personal data, then it must abide by federal and state regulations. Marketers are responsible for knowing these laws before gathering or selling information about consumers. Telecommunications companies are also governed by hurdles in regard to using customer information. Databases can contain many items of personal information that help businesses target their marketing efforts. 

However, telemarketers face many obstacles when gathering information from customers. The Telephone Consumer Protection Act is a federal law that prohibits these businesses from contacting customers through unsolicited phone calls and text messages. Since phone calls can be easily monitored by customers, this form of communication is not the most effective way to reach potential clients. Telemarketing companies have found more success when using automated systems to contact potential customers. These systems have revolutionized the telemarketing industry and allow these companies to reach a much larger audience in a shorter span of time. However, even though this form of communication is more efficient, it can also lead to legal issues being raised against telemarketers.

Consider Email Marketing

In order to have a great email marketing campaign, it is important to have a list of emails from your customers. In some cases, you can simply ask for permission from them on your website or in person – but that doesn’t always work. In general, if the customer database is going to be used solely for commercial purposes, then it is usually legal to get their information. 

However, if the business wants to sell or share any part of the customer database with third parties, permission must be obtained from all customers who are included in that list. An important note is that sharing with trusted partners (such as your service provider for mailing) may not require explicit permission. Many businesses, especially smaller ones, do not realize that the database is actually a collection of customer information and it gives some rights to those customers. The business has the right to use the information as they see fit, but they also have responsibilities such as ensuring its accuracy and taking care not to share it with third parties. 

Marketers, telecommunications companies, and telemarketers face legal issues that must be considered before they create or use customer databases. All businesses should ensure that their customers are informed of their privacy rights. With this information in hand, these companies can avoid legal actions taken by angry customers now and in the future.

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