Executives acknowledge ethical concerns in personal data collection

A KPMG survey found that a notable share of senior executives see ethical problems in how their own companies handle personal data. The findings matter because artificial intelligence systems depend on large stores of data, making collection practices central to trust, regulation and business risk.

KPMG said it surveyed 250 executives at the director level or above at companies with more than 1,000 employees. In that group, 29% said the way their companies gather personal information is “sometimes unethical,” and 33% said consumers should be concerned about how their companies use personal data.

Orson Lucas, a principal in KPMG’s U.S. privacy services team, told Fortune he was surprised by the results. Lucas said many companies he works with appear to be trying to handle consumer information responsibly, though he said some may have a gap between their public privacy positions and their actual practices.

KPMG’s survey also showed that companies are collecting more data, even as executives acknowledge gaps in protection. According to KPMG, 70% of the executives surveyed said their companies had increased the amount of personal information they collected over the prior year, while 62% said their companies should take stronger steps to protect data.

Lucas said businesses are beginning to shift away from a “collect everything” approach toward gathering only the information needed to serve customers. He cited regulation as one reason for that change, pointing to the European Union and U.S. states including California, Colorado and Virginia, where privacy laws have made it harder for companies to collect data without a clear business purpose and explicit consent.

Lucas also said data security and risk reduction are pushing companies to limit what they keep. Information a company does not store cannot be stolen in a cyberattack or exposed by accident, he said, while breaches can damage a company’s reputation, erode consumer trust and lead to fines or civil penalties in lawsuits.

Some companies are starting to treat privacy as more than a compliance issue, Lucas said. He said more forward-looking businesses are using privacy discussions to better understand what customers want and to make clearer agreements about what data customers will share, for how long and in exchange for what benefits, such as more personalized products or easier services.

KPMG also surveyed 2,000 U.S. adults and found broad consumer skepticism. According to the firm, 40% of respondents said they did not trust companies to act ethically with their personal information.

Lucas told Fortune that consumers will punish businesses that fail to handle data properly. The survey suggests many companies have not yet reached the level of transparency and restraint that privacy advocates and regulators have been pressing for.

Fortune reported that privacy concerns are also influencing how companies use artificial intelligence. The report pointed to growing interest in synthetic data, which is artificially generated information designed to resemble the broader patterns in real data, and federated learning, in which AI systems are trained using encrypted and shared data.

This story draws on original reporting from Fortune.