Internet users worldwide are increasingly becoming protective about their data privacy and how businesses use their private information.
Facebook, Google, and several other tech giants have made users more suspicious about their data privacy because of their information handling practices over the last few years.
The exponential growth of smartphones, tech gadgets, and the internet of things that collect all kinds of user data has raised more questions about privacy than ever before.
As a business owner, you must understand data privacy, your obligations towards your customers and users, and how a lack of compliance with different privacy laws can impact your business.
In this detailed article, we’re going to discuss all of these things in detail.
Let’s get started.
What is Data Privacy Anyway?
Data privacy is a part of the broader concept of consumer privacy and security on the internet. It is concerned with protecting consumer data on the internet from the unauthorized and undeclared collection, use, and processing.
Specifically, data privacy is a branch of data security that governs how organizations collect, manage, handle, and process consumer data.
It protects internet users from organizations that silently collect data using cookies, tracking codes, forms, and several other methods. It also protects consumers from websites and businesses that collect and sell their data to different third-party services.
Data privacy also addresses how businesses use the data they collect ethically with consumer consent. It ensures that companies adopt the latest technology to ensure that private consumer data is not accessed by unauthorized personnel and is only used for the stated purpose of collection.
Additionally, data privacy also provides a framework to organizations that collect consumer data on handling, storing, and sharing information with third-party services.
In short, data privacy represents everything related to protecting consumer data on the internet from theft, unauthorized access, unintended use, manipulation, and illegal transfer.
It makes the internet a safer place for consumers and makes businesses accountable for any malpractices.
The Main Elements Of Data Privacy
Data privacy is a broad topic that covers a wide range of consumer rights and business practices.
However, we can summarize its objectives into three core elements.
- Give users complete control over their data and how businesses use it.
- Procedures for collecting, managing, handling, processing, and sharing data.
- Ensure compliance with the relevant data privacy laws
Each of these objectives can be broken down further into smaller goals and actions to protect consumer data.
For example, giving users complete control over their data and how businesses use it includes user consent, usage declaration, and data access rights.
Similarly, procedures for handling data can include technological requirements, data encryption, access limitation, sharing protocols, etc.
Data privacy laws cover the various regulations to protect information privacy and their jurisdiction that we will discuss later in this article.
The core objective behind these data privacy elements is to create a transparent and secure environment on the internet where consumers can exist without fearing their privacy.
It also benefits businesses by allowing them to comply with data privacy best practices and stand out from their competition by helping them build trust with customers.
Why Is Data Privacy Important?
In 2017, The Economist released an article called, “The world’s most valuable resource is no longer oil, but data,” discussing the data economy.
Today, we live in a data economy where organizations like Facebook, Amazon, and Google have become multi-billion dollar entities that are more powerful than many governments worldwide.
Data is their most significant resource and strength.
They gather data from every user touchpoint like internet browsers, mobile apps, smartphone cameras and mics, device location, and usage habits, etc.
Countries worldwide are in an open data war with government-backed startups, social networks, and mobile apps trying to capture as much consumer data as possible.
The more data organizations have, the more control they can exercise on consumers in advertising, marketing, and even manipulating consumer views.
Uncontrolled and unlimited data collection by governments and their affiliated agencies also severely threatens civil rights and liberties.
Privacy is a fundamental human right, but without adequate data privacy measures, organizations can easily violate this right and invade an individual’s privacy without any repercussions.
This is why several countries and regions have introduced strict and detailed privacy laws to protect their citizens’ right to information privacy.
What Are Data Privacy Laws?
Data privacy laws provide the legal framework to protect consumer privacy and hold businesses accountable for any breach of confidentiality.
Many countries have introduced different privacy laws over the years, but GDPR, CCPA, and GLB are considered some of the most influential and detailed privacy legislations.
GDPR, in particular, has had the most significant impact on businesses around the world.
It is the most detailed privacy law ever and addresses all the key privacy issues modern-day consumers face when using the internet on their computers or smartphones.
GDPR, and all other privacy laws, have limited jurisdiction. For example, GDPR only applies to businesses that serve EU citizens in any way. CCPA is limited to companies that serve consumers in California.
However, as a result of GDPR, many other countries are adopting similarly detailed privacy laws that draw a red line for businesses tracking, collecting, managing, processing, or using consumer data in any way.
How Data Privacy Works
Data privacy is governed by the privacy laws in your country or the country of your target audience.
However, all privacy laws have the following factors in common.
Respect The User’s Right To Be Left Alone
Data privacy laws require that you respect an individual’s right to be left alone. This means that a user can refuse to share their data with your company, not allow you to use it for commercial purposes, disallow device or location access, etc.
All data privacy laws accept a user’s ownership over their data and forbid any website, mobile app, or online platform to use it in any way that violates this ownership.
You Can’t Collect Data Without User Consent
Another foundational point of all data privacy laws is the right of consent. A business cannot collect, track, store, process, or share user data without explicit and voluntary consent.
Many privacy laws have emphasized consumer consent for data collection, But GDPR has taken this concept to an entirely new level.
Under GDPR, all businesses must seek exclusive consent for every kind of data they want to gather from their users.
Businesses need to specifically mention different data types and seek consent for them separately. Data privacy laws also state that consent should be for a limited time and with clear boundaries. Therefore every time a business seeks approval, it should state the purpose of data collection and the duration for which it wants to keep the data.
Any data collection or processing without user consent is a violation of data privacy.
However, as a business, you can refuse service to a customer/user that does not consent to share the necessary data with you.
You Must Ensure Transparency
Data privacy demands transparency from all businesses collecting user data.
Transparency means a business must clearly state the purpose of data collection, declare if the data will be shared with any third-party apps or partners, where it is stored, how it is processed, and how users can access or change it.
Transparency also means that a business is always willing to engage with its users if they have any questions or concerns about their data.
Businesses should be willing to share their processes for data handling and management and educate the users about their measures for data privacy.
Data Privacy Is Your Responsibility
Data privacy laws state that the ultimate responsibility for the protection and privacy of consumer data lies with the business collecting it.
Once a business gathers data with a user’s consent, it should ensure that all the necessary measures are in place to protect the data from unauthorized access, modification, manipulation, or erasure.
This could mean investing in data encryption, usage rights, technology infrastructure, and staff training.
Ultimately, the businesses collecting user data are to be held responsible for any security or privacy breaches.
There Are Consequences For Non-Compliance
All privacy laws and regulations state various forms of penalties for non-compliant businesses.
The penalties vary from fines and imprisonment to license cancellations and compensation to the affected users.
The financial penalties can be worth millions of dollars, and imprisonment sentences can equal several years.
Data Privacy Benefits Your Business
Another common theme in all data privacy legislation is to convince businesses about the benefits of privacy.
Companies should not view data privacy as an additional cost of doing business. Instead, they should consider it an investment that makes their brand more credible, trustworthy, honest, and consumer-friendly.
To the increasingly privacy-conscious users, brands can use their data privacy compliance as a selling point.
How To Get Started With Data Privacy
Complying with the relevant data privacy laws isn’t a gradual and time taking process. You cannot ensure compliance in one day or even a month.
However, the following steps will help you progress towards data privacy compliance in the long run.
Understand Your Obligations As A Business
Understand the purpose of data privacy, why consumers are so sensitive about it, and your role in ensuring privacy as a business owner.
Identify the relevant data privacy laws that apply to your business and study their exact requirements from you.
We would recommend engaging a legal expert at this stage to help you chalk out the exact steps you must take to comply with the relevant laws.
Understand User Privacy Rights
The next step is to understand the rights of your users and the different ways you need to serve them as a data privacy complaint company.
For example, GDPR gives users the right to access their data, know what data a business is gathering, how it is being processed, and whether it’s being shared with any other companies, apps, or websites.
Privacy laws also give users the right to change, update, or completely erase their data at any given time. In most cases, businesses have up to 30 days to comply with such requests.
The most significant user right for data privacy is that a business cannot collect, process, store, alter, or share data without the user’s consent.
Develop The Necessary Processes For Data Privacy
Once you understand user rights and the relevant laws’ demand, it’s time to take concrete action to ensure data privacy.
Audit your existing privacy standards and identify all the improvement areas in your system. Typically, you’d need to invest in your IT infrastructure, upgrading your systems to handle user data, developing usage rights, applying data encryption, and educating your staff about the importance of data privacy and the consequences of non-compliance.
Update Your Policies And Website For Compliance
Your policy statement should list the ways you collect user data, your purpose for data collection, the ways you will use data, any partners with whom you share data, and the security measures you take to secure data privacy.
Also, add any specific declarations or user consent statements to your site. For example, for GDPR compliance, you must add a cookie tracking and data collection statement to seek the user’s consent.
Similarly, you need to mention every purpose of your data collection under your website’s opt-in forms.
Updating your policies and website for compliance is a time-consuming process because you need to evaluate everything from a data privacy perspective and make adjustments where necessary.