Companies Paying Attention to Customers’ Private Information

The seminar room at the JW Marriot Hotel in Seoul was filled with Chief Privacy Officers (CPO) from more than ten companies like KT, NHN, and Kiwoom Securities in the morning of August 22.

The topic of the seminar was “private information management risk.”

“The Personal Information Dispute Mediation Committee ruled that the telecommunications company A should pay 200 thousand won in consolation payment fees to its customers for using their private information on marketing a different product. Let’s say that 10 thousand customers were affected. This would mean a payout of 2 billion won. These days, managing customers’ private information is part of a company’s risk factor.”

CPOs grasped every word of Kim & Chang lawyer Gu Tae-eon, the lecturer at the seminar.

Companies can pay overwhelming amounts for misuse-

Companies are anxious over the fact that they stand to lose billions of won for misuse of their customers’ private information. Risk stemming from this is now termed, “private information management risk.”

The number of telecommunications and Internet companies that have been fined for misuse of customers’ private information has been on the rise these days.

KT and Hanaro Telecom have recently been charged by the police of illegally using the private information of 7.3 million customers.

Customers and civic groups could sue these companies. If the customers ask for 300 thousand won of compensation each, the two companies could stand to pay 2.2 trillion won.

“We are preparing to raise a lawsuit to deter companies from freely using customer information as they have been doing,” said Committee Member Jeon Eung-hwi of the Green Consumers Network. “We think we will have a high chance of winning if the police investigation proves the two companies guilty.”

NCsoft defended itself against a10 billion won compensation litigation suit filed by ten thousand victims who had their identities stolen, but the customers appealed in July and litigation is still pending.

Many Internet service providers saw their number of new customers in July and August dwindle after strengthening private information protection clauses for new customers.

“Private information has become a big risk for companies,” said Information Protection Division Director Park Seok-joon of KT. “Not only can losses be incurred, but the company image gets hurt as well.

Private information is not being well-guarded-

Companies are scurrying to manage their customer private information risk, but it may already be too late.

KT president Nam Joong-soo is preparing some new measures, such as the “customer information safety certificate” and the “customer information leak prevention system.” KT established a private information protection division this April.

SK Telecom has started an investigation on stores countrywide that will go on till late November.

NCsoft is strengthening personal computer security and has come up with a warning system that warns customers when their private information has been violated.

Experts, however, say that much change cannot be expected if companies do not realize the importance of their customers’ private information.

“Korean companies have a very bad track record with their customers’ information,” pointed out Lawyer Kim Borami of the Law Firm Moonhyung.

“Internet companies with average lives of just three years have access to huge amounts of private information,” lamented Director Park Gwang-jin of the Korea Information Security Agency.

nex@donga.com imsun@donga.com