A privacy policy is one of the most important documents that an organization – government or private – can make in the digital era. It displays an organization’s commitment to maintaining the security and integrity of the consumer data that it handles.
What Is a Privacy Policy?
A privacy policy is a legal document that details some or all the ways a company collects, manages, and processes its users’ personal information. It must be clear and easy to understand. It must be comprehensive without any superfluous detail. It must also be accessible to all online users.
Here’s what a privacy policy should cover:
- What types of data do organizations gather from users?
Consumer data pertains to a broad range of information about the people and businesses that the organization serves – demographics, financial information, and behavioral data to name a few. Organizations list all the types of data that they gather from consumers online in their privacy policy.
- Why do organizations gather the data?
Aside from listing the different types of consumer data that organizations collect, a privacy policy details the purpose of the information. Site improvement, advertising, and personalization are a few examples.
- How do organizations gather the data?
In a privacy policy, organizations should list some or all the ways that they use to gather consumer data. Does the organization directly ask consumers for data via forms? Is it indirectly tracking them?
- How do organizations store the data?
Users have a right to know what the organization is doing to safeguard their personal information. Thus, in a privacy policy, an organization must allot a section for the storage of data. The organization must disclose the processes that they are taking to store and manage data in a safe environment.
- Who will have access to the information?
Organizations may share the information with corporate affiliates and third-party vendors that provide specialized services, such as payment processing, business analytics, and more. Users have the right to know all the affiliates, third-party vendors, and service providers that will be able to access their data.
- Whom do consumers contact for queries?
The organization must provide its contact information in the privacy policy so that consumers can direct their questions and concerns to the right authority.
Types of Consumer Data
A privacy policy must list the categories of data that the company collects from its users. Companies automatically collect some information when a user enters the website. Users voluntarily provide other information when they register, subscribe, or contact the company directly.
Here are the most common types of consumer data that companies collect:
- Personal data
Personal data refers to any form of information that can be used to identify a person. It includes names, home/mailing addresses, home phone numbers, email addresses, financial information, and more.
- Usage and analytics data
Companies may automatically collect data when users visit the website, such as the Internet Protocol (IP) address, operating system, and other server log information. This also covers web browsing habits – from the pages that users view and the links that they click to the way they navigate the website.
- Cookies
A privacy policy may also disclose the use of cookies to enhance the user’s browsing experience. Additionally, it’ll have a clause explaining how users can disable or delete cookies and how it will affect the website’s functionality.
Is a Privacy Policy Required in the US?
There isn’t an extensive federal law that governs data privacy and requires a privacy policy in all circumstances. However, there are existing state, international, and sector-specific federal laws that govern the collection of personal information under specific circumstances. US companies have to comply with these regulations if they meet the specific circumstances.
Here are a few trade-specific federal laws:
- Health Insurance Portability and Accounting Act
HIPAA sets the national privacy policies that protect medical records and personal health information.
- Fair Credit Reporting Act
FCRA regulates the collection, use, and dissemination of credit information.
- Children’s Online Privacy Protection Act
COPPA governs the collection of data from minors. It requires all websites that gather data from children to have a privacy policy.
- Gramm Leach Bliley Act
GLBA is directed towards banks and other financial institutions. It requires them to specify what type of data they gather, how they use the data, and how they protect it.
