Shadow AI and Data Privacy Risks

David

Hey everyone, welcome back to AI for Small Business. I’m David, and as always, I’ve got Kevin here with me. Today, we’re diving into something that, honestly, most business owners don’t even realize is happening right under their noses: Shadow AI.

Kevin 2

Yeah, Shadow AI. It sounds kinda spooky, but it’s really just all those AI tools your team might be using without, you know, running it by IT or management first. Like, someone finds a free chatbot online, plugs it into your website, or maybe they’re using an AI writing app to crank out emails faster. It’s super convenient, but it can get messy real quick.

David

Exactly. And I’ll admit, I’ve seen this firsthand at AyudaConnect. There was this one time, I think it was last year, I noticed our marketing team was suddenly way faster at turning around blog posts. I mean, I’m all for efficiency, but it was almost suspiciously fast. Turns out, they’d found this free AI writing tool and were using it to draft content. Nobody told me, nobody told IT. It was just… happening in the background.

Kevin 2

That’s classic. And honestly, it’s not just your team, David. I see this all the time with clients. Folks just wanna get their work done, so they grab whatever tool helps. But the problem is, when you’re dropping company info into these random AI apps, you have no idea where that data’s going.

David

Right, and it’s not always malicious. Sometimes it’s just someone trying to make their job easier. But every time you paste customer info or pricing into a tool you found on Google, you’re rolling the dice with your business’s privacy.

Kevin 2

And the thing is, Shadow AI is everywhere now. Even if you think your team isn’t doing it, odds are, someone’s experimenting behind the scenes. It’s just too easy not to.

David

So let’s talk about what can actually go wrong. I mean, it’s not just about someone using a fancy tool — it’s about what happens when sensitive data leaks out. We’re talking customer info, trade secrets, maybe even your secret sauce recipe, right?

Kevin 2

Yeah, and I’ve seen companies get burned by this. There was a client of ours — I won’t name names, but they’re in retail — who had an employee using an AI chatbot to handle customer support tickets. They thought it was harmless, but one day, a transcript with private customer details ended up on some public forum. It was a total accident, but the damage was done. Their reputation took a hit, and they had to scramble to do damage control.

David

That’s brutal. And it’s not just about the immediate fallout, either. Once that info is out there, you can’t really put the genie back in the bottle. I read about a case where a company’s internal pricing strategy got leaked because someone used an AI tool to summarize a confidential document. Suddenly, competitors knew exactly how they were setting prices. That’s a nightmare.

Kevin 2

And honestly, most of the time, it’s not some big hack. It’s just regular folks trying to be efficient, not realizing the risks. At MissionServ, we had to help that retail client lock things down after the fact — new policies, better monitoring, the whole nine yards. But it would’ve been a lot easier to prevent than to clean up after.

David

Yeah, prevention is way less painful than damage control. And I think a lot of small businesses just don’t realize how quickly things can spiral if you’re not paying attention to these Shadow AI tools.

Kevin 2

So, what can you actually do about it? First off, there’s this thing called the ERASE INTERNET ActioN — it’s basically pushing for stricter rules on how internet data is handled. It’s not just for the big guys; it’s gonna affect everyone, even small businesses, when it comes to what you can and can’t do with customer data online.

David

Yeah, and honestly, it’s about time. But you don’t have to wait for the law to catch up. There are tools out there, like Lemony.ai — and I’m picky about what I recommend, but this one’s solid. Lemony lets you use AI in your business, but you stay in control of your data. You get the benefits, but you’re not just handing over your secrets to some random app.

Kevin 2

Exactly. Lemony.ai helps you see what AI tools your team is using, and makes sure you’re not accidentally leaking info. It’s like having a flashlight in a dark room — you can finally see what’s going on, and you can set some ground rules.

David

And if you’re a small business owner listening to this, here’s a quick checklist — straight from my consulting playbook. One: talk to your team about what tools they’re using. Two: set clear policies on what’s allowed and what’s not. Three: use a platform like Lemony.ai to monitor and manage AI usage. Four: review your data privacy practices regularly. And five — and this one’s easy to forget — make sure everyone knows why this matters. It’s not just about rules, it’s about protecting your business and your customers.

Kevin 2

Couldn’t have said it better. And if you’re not sure where to start, just start the conversation. You’d be surprised what you find out when you ask your team what tools they’re actually using.

David

Alright, that’s a wrap for today. Shadow AI isn’t going anywhere, but with the right steps, you can keep your business safe and still get all the good stuff AI has to offer. Kevin, always a pleasure.

Kevin 2

Right back at you, David. Thanks everyone for tuning in. We’ll catch you next time with more ways to make AI work for your business — and keep it out of trouble.

David

Take care, folks. See you next episode.