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Privacy Policy 101: What Is A Privacy Policy And Why Should You Have One?

A privacy policy is a document that tells people what information about them you collect and how you use it. It's a legal framework that positions your business as reputable to incoming customers.

It's one of the most important things to have when selling or conducting business online since it protects your customers and clients against potential risks. It's a security measure for both your business and your customer's personal information.

Here are nine reasons why you should have a privacy policy.

People Are Concerned About Their Personal Information Being Shared With Third Parties

Let's repeat that: People are concerned about their personal information being shared with third parties.

They don't trust companies to protect their data or have friendly privacy practices. They think there might be a breach of security and someone could steal their identity. It's happened multiple times, in multiple years, sometimes even multiple times in the same year!

If you're collecting sensitive information such as credit card numbers, bank account details, or Social Security numbers, then you must have a privacy policy. Your payment processor likely even requires it. This ensures that your customers and clients understand what information you collect and how you share it.

Animated camera peaking between blinds - People are concerned about their private info

It Protects Your Customers From Potential Risks

When you collect information from your customers, they expect you to protect it.

If you don't have a privacy policy, you could face legal action.

For example, if you sell products online, then you must have an up-to-date privacy policy.

This ensures that your customers understand how you plan to protect their data.

It Helps Build Trust

Having a privacy policy helps build trust between you and your customers.

Customers appreciate knowing exactly what information you collect and why you're collecting it.

Other than the banner your developer told you that you needed (and you do, they're a huge tie-in to most CMS software and to stay ahead of European Union sanctions and hefty fines), there are extremely privacy and security-oriented individuals who take every step possible to mitigate their information from being stolen. Perhaps they're so cautious because of being burned in the past, either way, they exist and they're very serious about not being lied to.

When you visit a website, you're leaving a lot of information exposed to entities you don't personally know. Things like IP addresses, a physical address if you're ordering something to be shipped, your unique device identifier (especially if you're using a mobile application), and more.

Man typing on simulated screen - Data privacy is a key point for privacy policies
Man tyData Privacy protection Policy Technology Legal Concept | Copyright: Rawpixel Ltd.

It Makes It Easier To Understand The Terms Of Service Agreement

When you have a privacy policy, it makes it easier for your customers to understand the Terms of Service agreement.

The idea behind this is that if you don’t tell people what they can do with your website, they won’t know what actions they've taken to break the rules. This means that if you don‘t specify exactly what kind of content you want to allow, users will assume they can post whatever they like. If you only say “no porn” without specifying which kinds of porn are acceptable, then you may find yourself having to deal with complaints from people who were just trying to share a sexy photo of their cat.

It Improves Customer Experience

Having a privacy policy improves customer experience because it gives them peace of mind.

It’s important to a segment of customers to understand what information you collect from customers, why you collect it, and how long you keep it. Your privacy policy should tell customers how they can access and correct any personal information you hold on them.

They feel safe knowing that their information is protected.

If you’ve ever had a credit card stolen from your purse or pocket, you know how important it is to keep your personal information secure. The same goes for your users. If hackers gained access to your personal information, we bet you'd be an anxiety-riddled mess.

It Gives You An Edge Over Competitors

If you have a well-thought-out and custom to your business privacy policy and competitors don't, then you'll have an advantage over them.

A vast majority of websites are still using cookie-cutter, or copy and pasted privacy policies from other sites. Just like those long EULA's people generally don't read when installing software, most business owners assume no one will read the privacy policy – so they then deem it not important.

You have to realize, a privacy policy is there to protect your business, as much as it's there to inform customers of your policy.

Who would you trust more? A store with a privacy policy tailored to its products or offerings, or a store that just says, "This is our privacy policy and protects us against <insert desired policy language here>"?

More than likely you're going with store A.

It Increases Sales

A privacy policy lets your customer know you're serious about combating all of the potential issues that could befall them if there's a breach.

People like buying from businesses that take care of their customers' privacy.

Customers expect companies to protect their personal information. As consumers, we rely on corporate security policies to keep our data secure when shopping online. We want to feel safe knowing that our sensitive details are protected by the company we do business with.

Nefarious image of hacker - customers expect their privacy to be protected by companies

A privacy policy lets your customer know you're serious about combating all of the potential issues that could befall them if there's a breach.

It Shows That You Care About Your Customers

If you want to win new clients, then you need to show that you care about their privacy.

You should always ask yourself if you really need the information you’re collecting and whether it’s relevant to your business. Obviously, if you're selling goods in your store, you'll need email addresses, but do you really need their mother's maiden name to sell them tchotchkes?

It’s also worth considering whether you could do without any personal information altogether. Platforms like WooCommerce, don't even store payment information and let payment processors handle all of that instead. It's a great data breach mitigation practice built-in into open-source software.

It Protects Your Reputation

Having a privacy policy shows that you respect your customers' privacy. Or at least do your best to.

When marketing your website, you often have to rely on third-party services to perform specific data collection. Marketing automation platforms, analytics platforms (Google Analytics, Matomo, Fathom, etc.), heatmap generators, advertising services, etc. Often, you're able to mitigate the installation of cookies before a customer accepts your terms via your privacy pop-up.

Without a privacy policy and pop-up (provides you with verifiable consent to track customers), you're waving a huge flag to customers letting them know there's nothing to protect them from any unfortunate events.

Privacy policies are important because they protect your users' personal information. They're also critical to protecting yourself against legal liability.

It's easy to forget that many people are still unaware of their rights regarding data collection and storage. In fact, according to the FTC, nearly half of consumers believe that companies will share their personal information without permission.

The bottom line is that having an accessible privacy policy ensures you're being transparent about how you collect and store user information. It protects you from hefty fines that could be levied against your business without one.

Does your website need a privacy policy? Contact us and we'll let you know exactly what your site needs to stay compliant and ahead of legal issues with a full website audit. We also partner with Termageddon and iubenda which are privacy policy generators that pride themselves on being on top of privacy laws and privacy legislation.

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