The goal of pseudonymization is to protect user privacy while preserving the information needed to track the performance of e-commerce and marketing campaigns. In response to growing global privacy expectations and regulations, many businesses are turning to pseudonymization as a strategy to help protect user privacy while maintaining access to data for planning and evaluation.

This article will explain what pseudonymization is and how it fits into various privacy laws across countries and regions. The discussion will include common pitfalls and how pseudonymized data can support compliance efforts under various regulations.

This article is intended for informational purposes only and does not constitute legal advice. For questions about your organization’s data handling practices or compliance obligations, consult with a qualified privacy professional.

What Is Pseudonymization?

The European Union’s General Data Protection Regulation (GDPR) defines pseudonymization as “the processing of personal data in such a manner that the personal data can no longer be attributed to a specific data subject without the use of additional information, provided that such additional information is kept separately and is subject to technical and organisational measures to ensure that the personal data are not attributed to an identified or identifiable natural person.”

In other words, data may be considered pseudonymized if someone looking at it would not be able to identify the user without additional information. Unlike anonymized data, the pseudonymization is reversible and the data may still be traced back to an individual if someone has access to the right additional information. The data is not encrypted and is readable without the use of a decryption key. (Although pseudonymized data may also be encrypted for increased security.)

Examples of pseudonymized data might include:

• Hashed values in place of email addresses
• Internal user IDs in place of names or email addresses
• Surrogate values in place of IP addresses

Why Pseudonymization Matters Under Privacy Laws

The usage of the terms pseudonymization, anonymization and de-identification becomes murky when comparing across national frameworks. Generally, de-identification is used to describe any process that keeps data from being tied to a specific person. However, regulations vary by region and industry. The following is a basic review of the various regulations as they relate to pseudonymization. Consult with an attorney or data privacy specialist for more detailed guidance.

• GDPR recognizes pseudonymisation as a method to reduce the risks to data subjects and fulfill certain data protection obligations. In some cases, this method may be mandated in order to meet requirements. Because this data can still be traced back to an individual, it is still considered personally identifiable information (PII) under GDPR and is subject to the same protections.
• The California Consumer privacy act (CCPA) has little to say about pseudonymization beyond a definition similar to the GDPR’s. It refers more frequently to the term deidentified, which it defines as “information that cannot reasonably be used to infer information about, or otherwise be linked to, a particular consumer.”
• Brazil’s Lei Geral de Proteção de Dados (LGPD) uses a definition of pseudonymization that seems to align with the GDPR, but uses this term only in connection with public health studies.
• Canada’s CPPA seems to demand the higher standard of anonymization, although this regulation is fairly new and many legal professionals are still debating its true implications. Canada’s term “deidentification” closely identifies with the GDPR standard for pseudonymization.
• India’s Digital Personal Data Protection Act (DPDPA) does not specifically use the term pseudonymized data, although previous versions of the law did.

It’s important to note that pseudonymization does not achieve full de-identification on its own. However, it is a valuable privacy-enhancing technique (PET) that helps to protect user information in combination with other strategies and techniques. The practice brings several benefits for businesses.

Benefits of Pseudonymization for Businesses

Lawful Data Processing - Pseudonymization may help businesses preserve access to certain types of data while supporting user privacy and compliance goals. Users must still consent to data collection, but businesses may have more freedom in how they process it. Consult a data privacy professional for specific guidance.

Reduced Risk Exposure - In the event of a data breach, pseudonymized data is harder for bad actors to use. They may not have gained access to keys and look-up tables, or the added processing time may enable incident response teams to intervene before further damage is done.

Supports Data Minimization and Purpose Limitation - Businesses can create different datasets for different purposes, each one containing the minimum data required. Purpose-specific pseudonyms (or keys) ensure that data collected for a particular purpose is not used beyond its scope of consent.

Preserves Analytic Value - Businesses can use pseudonymized data for research, testing and campaign development informed by real data patterns, while still protecting consumer information. This data may be more safely shared between departments or vendors when appropriate safeguards are applied, as pseudonymization adds a layer of protection.

Avoiding Common Misunderstandings and Pitfalls

Keep in mind that pseudonymized does not equal anonymous. Pseudonyms can still be traced back to an individual if someone has access to the key. Treating pseudonymized data as still potentially identifiable, and limiting access based on necessity, can help support compliance efforts.

Proper separation of pseudonymized data from keys, and lookup tables can help to mitigate re-identification risk. But over-reliance on hashing or deterministic tokens can create vulnerabilities. Businesses can discuss options with their data security professional to balance data availability with privacy and compliance.

Where Launch Labs Enterprise Data Solutions Fits In

Pseudonymized identities play a foundational role in how Launch Labs builds and activates identity graphs, with privacy-safety at the forefront. We link fragmented identifiers across touchpoints to form persistent, privacy-conscious profiles. This allows marketers to target, personalize, and measure performance without exposing identifying data.

It works by using deterministic and probabilistic techniques to build identity graphs. Pseudonymization of the inputs maintains a layer of protection throughout the process. Re-identification occurs only when explicitly permitted, such as for CRM activation or direct 1:1 outreach, and under appropriate access controls.

This system is built on privacy by design to support key regulatory principles including:

• Data minimization - only processing what is needed
• Purpose limitation - activating profiles only for specific, consented uses
• Pseudonymization - avoiding direct identifiers unless absolutely necessary
• Access controls and auditability - giving clients control of how data is linked and used

Because the system doesn’t directly identify individuals unless explicitly authorized, we’re able to support privacy-safe marketing across a wide range of regulated and consumer-focused environments.

See how Launch Labs Enterprise Data Solution can enhance marketing and personalization while protecting user privacy. Contact us to schedule a free consultation.

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