Four rules that businesses should adhere to when working with third-party vendors

In today's digitally connected world, the collection and sharing of data with third-party vendors has become commonplace. Here are four rules that businesses should adhere to when working with third-party vendors

Four rules that businesses should adhere to when working with third-party vendors

Share with others

With Great Data Comes Great Responsibility

Four rules that businesses should adhere to when working with third-party vendors

In today's digitally connected world, the collection and sharing of data with third-party vendors has become commonplace. 

While data sharing can bring great value to businesses, it also carries a great responsibility. Risk of misuse and breaches is high, and the companies sharing the data have the legal and moral obligation to protect that data. 

There’s an inherent risk that comes with sharing your data. It can be nabbed by hackers in the pipeline to your vendor, your vendor may experience a leak or that vendor could turn out to be irresponsible with your valuable data

There are four rules that businesses should adhere to when working with third-party vendors:

  1. Be mindful of compliance obligations when sharing data
  2. Be selective about the data you share
  3. Maintain transparency and openness with your vendors
  4. Choose vendors who prioritize security and privacy

While those rules don’t remove the risk, they will reduce your vulnerability to data breaches, leaks and misuses of data.

We’ll go through each of these rules in turn in the article below. 

Rule 1: Be mindful of compliance obligations when collecting data

Data collection and sharing with third-party vendors can be a risky endeavor, and companies must take the necessary steps to ensure compliance with applicable laws and regulations. Companies should understand which data they are collecting, why they are collecting it, and how it will be used. It is also important that companies have procedures in place to protect user data and keep records of all data sharing activities with third parties.

Companies should also be aware of their vendor's compliance obligations. Companies should ensure their vendors comply with any applicable laws and regulations related to data protection, privacy, or security. 

This includes making sure their vendors have appropriate safeguards in place for the collection, storage, use, transfer, or deletion of customer data. Additionally, companies should enter into a contract or agreement with their vendor that outlines what customer data they can access and process on behalf of the company. This agreement should also specify the responsibilities each party has when it comes to protecting user data and complying with applicable laws and regulations.

Companies must remain vigilant when dealing with customer data shared with third parties, as there is always some risk associated with such activities. Companies should regularly monitor their vendors activities to ensure they are adhering to any contractual obligations related to customer data handling and following best practices for secure processing of customer information. They should also keep track of any changes made by their vendors that could impact the security or privacy of their customers’ information. By taking these steps, companies can reduce the risk associated with sharing customer data while still meeting their compliance obligations.

Rule 2: Be selective about the data you share with vendors

In today's digital age, companies must be selective about what data they share with third-party vendors.Data should be on a “need to know” basis. Only the data needed for a vendor to do their job should be shared. 

Privacy regulations like GDPR and CCPA often put the responsibility for data privacy and security on the organization that first collected that data, regardless of if the breach happens due to a third-party vendor or not. You’re responsible for ensuring that data is protected from the moment of collection until that data is deleted.

That means that it’s critical for organizations to be aware of the data they’re sharing with vendors. Companies should require that all vendors have agreements in place that protect company data, while also being able to terminate vendor access rights if needed. Many organizations find that it’s helpful to have a solution in place that anonymizes their data, creates rules for access and maintains a secure database of all of their sensitive data. This approach allows them to get the best of both worlds – accessible data, without the risk of sharing too much.

Rule 3: Maintain transparency and open communication with your vendors

To protect customer data and remain compliant with all applicable laws, companies must maintain transparency and open communication with their third-party vendors. 

Companies should also be sure to ask the right questions of their vendors before entering into a contract. 

Questions to ask to assess third-party vendor privacy and security: 

  • What data will you have access to? 
  • How will it be processed and stored? 
  • Who will have access to the data? 
  • What security measures are in place for protecting customer data? 
  • How long will the data be stored?
  • What are the risks associated with sharing this data?

Keep in mind that the answers to these questions might change over time. That’s why it’s also important that companies keep an open dialogue with their vendors throughout the duration of the relationship to maintain trust between both parties. Consider scheduling regular check-ins on the handling of customer data and to review policies and procedures.. 

An open line of communication also allows both parties involved in the project – company and vendor – an opportunity to raise any potential issues before they become too large a problem. 

Transparency about any problems that arise during a project can help ensure that those problems are addressed quickly before they cause further damage or lead to legal repercussions down the line.

Overall, transparency is key when it comes to sharing customer data with third-party vendors in order for companies to remain compliant while protecting customers' private information from malicious actors. Companies must understand their compliance obligations, prioritize security and privacy protocols, communicate openly with their vendors regarding expectations surrounding handling customer data securely, all while maintaining transparency throughout the entire process so that customers feel safe knowing their information is being handled responsibly by both parties involved in its sharing.

Rule 4: Prioritize security and privacy when working with third parties

When it comes to working with third parties, organizations should always prioritize security and privacy. Companies must ensure that the vendor they are considering has comprehensive security protocols in place that include encryption of customer data, both at rest and in transit, as well as strict access control measures. 

Additionally, companies should only share the minimum amount of data necessary with vendors; any unnecessary information should be stripped from customer records before sharing. To further protect customers' private information, all stakeholders involved must understand how customer data will be used and handled by vendors before sharing it with them.

Organizations must also conduct thorough research into potential vendors’ practices prior to engaging them so they can review any existing contracts or agreements for compliance with regulations. 

When selecting a vendor to work with, businesses should look for:

  • Experience dealing with sensitive data
  • Robust privacy policies already in place
  • A commitment to secure processes 
  • Transparency about customer data use. 

Furthermore, organizations must monitor their vendor's activities throughout any collaboration—and beyond—to guarantee that customer data remains secure and compliant with applicable laws.

By taking these steps, companies can protect customers' confidential information while still making use of third-party services. 

Proactively prioritizing security when engaging third-parties helps reduce the risks associated with sharing personal information while still fulfilling compliance requirements. 

How to reduce your risk when sharing data with third-party vendors

In order to collect your data and put it to work for you, there are times when you’ll have to share your data with third-party platforms like advertising platforms that help you find more customers and grow, outside parties that help you understand your customers better or analytics platforms that help you track your most important KPIs. 

Each of these platforms carries with it different risks. MetaRouter helps you manage those risks by giving you complete control over your data.  our customer data is your most valuable asset. Reclaim control of that data and amplify downstream activation by harnessing the power of our proprietary first-party, server-side data infrastructure. Revolutionize your customer data effectiveness by removing third-party tags to deliver next-level performance. Learn more here.