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What is a Privacy Policy : A Complete Guide

Published August 18, 2023 / Updated December 13, 2023

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Privacy has become a paramount concern for most users online. They're far more vigilant about what data they share and, more importantly, whom they share it with. For organizations, one of their most effective tools to alleviate users' concerns around data privacy and the organization's data practices is the privacy policy.

A privacy policy is meant to be a simple document. Its primary function is to inform visitors about the website's data processing practices per the guidelines of the data regulations the website is subject to.

The term privacy policy itself is used interchangeably with privacy notice. While the information in both documents might be similar in most cases, there is a slight difference. In a strictly legal context, a privacy policy is actually an internal use document meant to serve as vital documentation related to an organization’s data practices.

The privacy notice is for the users visiting a site as it explains how the website collects, uses, retains, and discloses their personal information. Various data regulations refer to it as a privacy statement, a fair processing statement, or at times, a privacy policy.

Read on to learn more about what information a good privacy policy should contain, how it benefits businesses, the potential penalties for not having an adequate privacy policy, and the most effective and efficient way for businesses to deploy a privacy policy on their site.

Purpose of a Privacy Policy

A privacy policy's primary purpose is to act as a website's way of communicating with its users and any potential visitors. A good privacy policy is clear, concise, uses unambiguous language, and, above all, aims to give users a far better understanding of the organization's data processing and collection practices.

Additionally, a good privacy policy must:

  • Reflect an organization's transparency related to its data processing practices;
  • Educate the user on the organization's data practices;
  • Inform the user how they can exercise their data subject rights;
  • Give users an idea of how their data is collected, why it is collected, mechanisms in place to protect this data, and if the organization has plans to sell/share this data;
  • Leave users with a better understanding of how they benefit from letting organizations process their data.

Benefits of Privacy Policies for Businesses

Some of the key benefits of having a robust and easy-to-understand privacy policy are mentioned below:

  • A privacy policy helps establish terms & conditions which may help your organization manage and mitigate liability in possible future disputes;
  • An easy-to-read and understandable privacy policy is an excellent way for businesses to communicate with their customers;
  • It helps a business educate its users about their data practices and gain their informed consent to proceed with data processing;
  • A robust privacy policy is a great way for businesses to showcase their transparent stance toward maintaining their users' data privacy;
  • Helps businesses avoid legal battles related to properly informing users about their data practices, such as the one faced by WhatsApp in Ireland;
  • A privacy policy can help businesses in their SEO and marketing purposes;
  • A good privacy policy ties in nicely with the modern corporate social responsibilities of most businesses.

What to Include in a Privacy Policy?

Every website's privacy policy should be transparent about its data practices. In doing so, most websites may find the need to include various different bits of information. However, there are certain fundamentals that each privacy policy ought to have. As a form of good practice and a way to ensure compliance with nearly all major data regulations, the following information should almost always be included in any privacy policy:

Types of Personal Information Collected

The most fundamental information any privacy policy must contain is precisely what kind of data a website collects. This is particularly useful when a website collects personal information or sensitive personal information related to its users. A privacy policy should ideally also contain the following further information:

Collection Process

A website should be as transparent as possible in explaining its mechanisms to collect users' data, such as via cookies or sign-up forms.

Usage

A good privacy policy should be able to explain how the users' collected data is used. This can raise a website's chances of getting users to share more data if done properly. Some might argue this is one of the most important elements of a privacy policy.

Data Security

Of course, a privacy policy must be as meticulous in explaining the security measures and mechanisms a website has in place to protect all the users' data collected. Doing so is a good practice and reflects the organization's data security transparency and accountability toward its users.

Data Sharing

In case a website sells OR shares its users' data with other third parties, it is highly recommended that it explains why it does so to its users via the privacy policy. Other additional information can be who these third parties are, e.g., contractors, advertisers, analytics providers, etc. A website should attempt to be as precise as possible while providing this information.

Cookies

It is the most important tool an organization has when it comes to collecting its users' data online. While it's recommended to have a dedicated cookie policy page to elaborate as much as possible on the website's use of cookies, a descriptive section on the privacy policy page is also a good practice, giving users a fair understanding of the website's cookie policy.

Data Subject Rights

Data regulations empower users with specific rights known as data subject rights. A good privacy policy should not only list down these rights for the users but explain what they mean and, more importantly, how users can exercise these rights.

Contact Information

Details related to how users can contact the website for complaints, support, and suggestions should also be highlighted in a privacy policy. An email address, a phone number, and a URL to a dedicated chatbox are typically included. Additionally, depending on which data protection law a website is subject to, the contact information of the organization's data protection officer may also need to be provided.

Failure to Provide a Privacy Policy: Fines & Penalties

Most regulations obligate organizations to have a clearly visible page on their websites explaining their data practices. Failure to do so is almost certain to result in non-compliance with the regulation itself. Here are the penalties that can be levied on organizations found in non-compliance with this requirement:

CPRA - California, US

Per the upcoming CPRA regulations, organizations may face a fine of up to $7,500 for willfully not having a compliant privacy policy. Additionally, they may face a $2,500 fine for each accidental violation of this requirement.

General Data Protection Regulation - EU

Under the GDPR provisions, any website that fails to comply with the privacy policy requirements may face fines of up to $20 million or 4% of the organization's global annual turnover of the preceding financial year (whichever is higher).

PIPEDA - Canada

As per PIPEDA guidelines, organizations can be fined up to $100,000 for every instance they knowingly break the law.

The aforementioned penalties are just an example of the fines an organization faces for violating any provision of the law, including a non-compliant privacy policy. As mentioned earlier, each regulation is different and places different requirements from a privacy policy for websites. Similarly, the penalties differ as well, depending on numerous factors such as the severity of the privacy policy's inadequate compliance, the nature of the inadequacy, and whether it was the organization's first offense.

How to Create a Privacy Policy?

Traditionally, most websites have either used automated privacy policy generators or have manually created their privacy policy. Each of these methods comes with its own cons.

Automated privacy policy generators are more likely to create generic, cookie-cutter content that is neither fit nor appropriate for your specific privacy operations. This is because, as mentioned earlier, each organization's privacy practices are unique. A privacy policy page should explain such practices with the intent of leaving users with the knowledge they need.

On the other hand, manually creating a privacy policy page solves the problem mentioned above, but it raises another in its stead, inefficiency. Most websites operate in multiple countries. As a website is subject to various data regulations, the privacy policy pages must reflect this and be adjusted depending on which country the website is accessible. Attempting to do so manually is inefficient and a needless burden on resources that can be better utilized elsewhere.

How Does Securiti Help?

By now, it should be clear exactly what a privacy policy can do for a business. It's suitable for marketing purposes, helps avoid legal battles, and is a great way to build goodwill with users.

However, the first step is to realize why a good privacy policy is necessary. Designing such a policy and having it as an easy-to-read and understandable section on the website is another story.

This is where Securiti can be a great help.

A renowned name in providing data security, privacy, governance, and compliance solutions, Securiti offers a fully functional Privacy Center that consolidates all your key privacy obligations under one common platform, and helps teams automate cookie and consent preferences, DSR requests, Do Not Track signals, and Privacy Notices.

Privacy Center allows you to set up and publish privacy notices in just a few minutes. You can either create custom privacy notices or set up pre-built templates that are mapped to global privacy regulations, such as GDPR, LPGD, CPRA, and more. You can further dynamically update your privacy notices in real-time via integrations with consent, DSR, and data mapping.

Sign up for Securiti Privacy Center and set up automate your privacy notices along with other key privacy data obligations.


Frequently Asked Questions (FAQs)

A privacy policy is an internal document that communicates with employees or internal stakeholders. It is a source of guidance governing an organization’s personal data handling  and practices regarding the collection, use, disclosure, and protection of personal information.

Examples of privacy policy sections include information about data collection, method and purposes of processing, user rights, data sharing and transfer practices, security measures, data handling procedures, access and security, Incident response, monitoring and auditing, and contact information.

A privacy policy template is a preformatted document that provides a basic framework for creating a privacy policy. Organizations can customize it to align with their data practices.

The functions of a privacy policy include informing employees and internal stakeholders about a company's data handling practices, building internal trust, outlining user rights, complying with legal requirements, and facilitating transparency about an organization’s practices.

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