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What is a Privacy Policy: The Definitive Guide

Privacy is a fundamental right and has become a hot topic with the rise of the digital age, with people knowingly, and sometimes unknowingly, sharing a large quantity of personal information online.

Regulating privacy is a challenge, with new websites popping up every day and customers located all over the globe, where privacy laws may vary from country to country.

As a website (or mobile application) owner that collects personal information, you need to do your part by having a detailed and easily accessible privacy policy.

Expert tip: Take the hassle of writing your own privacy policy away with our privacy policy generator. It will save you hours of work and possible costly legal mistakes.

What is a Privacy Policy?

A privacy policy is a document contained on a website that explains how a website or organization will collect, store, protect, and utilize personal information provided by its users.

The exact definition of personal information will vary depending on the piece of legislation but, generally, the following are included:

  • Names
  • Dates of birth
  • Addresses (postal and email)
  • Payment details (credit card numbers)
  • Location (IP address, geolocalization)
  • Social Insurance Numbers

In addition to outlining how the company will use the information, it also includes how it will meet its legal obligations, and how those sharing their data can seek recourse should the company fail to meet those responsibilities.

Why do You Need to Have a Privacy Policy?

Reasons to have a privacy policy

It’s required by law

Most countries, by law, require that you have a privacy policy in place if you collect personal information from your users.

European Union

The European Union is known for having some of the strictest privacy laws in the world. The cornerstone of privacy legislation, the General Data Protection Regulation (GDPR) provides detailed information in articles 12, 13, and 14 in regards to privacy policies and the importance of facilitating the exercise of the rights that your users have over their data.

Wherever your company is located, if you operate in Europe or process the personal information of users located in Europe, you will need to comply with the GDPR and thus have a privacy policy that is easy to understand and access. You must also ensure that you have your users’ unambiguous and affirmative consent before you start collecting any personal information.

To be found GDPR-compliant, a privacy policy must contain some very specific elements. Unlike some other privacy laws, the GDPR is actively being enforced and the stakes are high for businesses that choose not to comply, with hefty fines in the millions of dollars.

Check out our article on how to write a GDPR compliant privacy policy.

United States (California)

While there is, to date, no privacy legislation at the federal level in the United States, the state of California has enacted its own in order to protect its constituents’ privacy.

The California Online Privacy Protection Act (CalOPPA) provides that any commercial website that collects or uses personal information from Californian residents must have a conspicuously placed privacy policy that details how it is collected, used, and shared.

In addition, the California Consumer Privacy Act (CCPA) came into force in 2020 to supplement the CalOPPA. While its scope of application is more limited - as it is notably targeted to businesses that either has an annual gross revenue of more than $25 million, make at least half of their revenue selling personal data of its users, or that sell, buy, share or receive personal information from at least 50,000 households, consumers or devices annually - it should still be taken into consideration.

This piece of legislation encourages transparency and notably requires that businesses serve users with a notice at collection or before the time that it starts collecting personal information. That notice at collection should link to a privacy policy that is to be updated at least every year.

For more information about CalOPPA and CCPA and to learn what elements your privacy policy should contain, read our article on the subject here.

Australia

Australia regulates how businesses should handle personal information through its Privacy Act of 1988.

Organizations that need to comply with the Australian Privacy Principles i.e. generally businesses that have an annual turnover of more than $3 million (in addition, some other smaller organizations need to comply, such as those that buy or sell personal information or provide health services - make sure that you consult with a lawyer) notably need to have an up-to-date and clearly expressed privacy policy that is available free of charge, in an appropriate format and that contains all the information required under this Act.

Other Countries

These examples are solely used to show you what some countries across the globe require when it comes to collecting personal information from their residents but many other privacy laws and regulations exist and they each have their own particularities - it is crucial that you make sure that you are complying with the sets of laws and regulations applicable to your website before you start collecting and processing any kind of personal information.

It’s Required by Third-Party Services

You may not be aware of this, but most of the third-party services commonly used on websites require that you have a valid privacy policy in place in order to comply with their terms of service.

If you are using Google AdSense or Google Analytics, for example, you must have a privacy policy that includes all the information that they require (including a clause regarding your use of cookies). Failure to do so means violating their terms, which could lead to you not being able to use their services.

It Helps You be Transparent

Having a privacy policy is also essential from a business perspective in order to be transparent with your website visitors and build a relationship of trust, especially since people increasingly value their privacy.

A website that does not inform its users that it collects data or that hides its policy may look untrustworthy - don’t let this be the reason why you lose business to your competitor.

What to Include in a Privacy Policy?

What to include in a privacy policy

What you should include in your privacy policy will depend on the nature of your business, where you operate and where your customers are located, the laws applicable to you as the third-party services that you use.

However, some terms are fairly standard and can be found in most privacy policies.

If you want to save yourself the stress and trouble of writing your own policy, use our privacy policy generator. It will help you generate a privacy policy that meets most third-party services requirements and uses the strictest guidelines to provide you with global coverage.

Personal Information

Logically, your privacy policy should start by telling your users exactly what type of personal data you wish to collect, whether directly or indirectly/automatically, from names to location and phone numbers to email addresses, list it out.

If you are collecting data that you consider essential for your users to be able to use your website, mention it so that they can make an informed decision in regards to what information if any, they wish to share with you.

Collection Process

You should be transparent and explain how you intend to collect personal data from your users. If you are collecting usage data, tracking geographical location, or using any third-party services, for advertising and retargeting purposes, for example, you should mention it, as your users may not realize that you are collecting data in the background.

Usage

At this point, your users know that you will be collecting their personal information but what will you be doing with it?

This is probably the most important section of your privacy policy as using this data to offer a better and more customized experience on your website is different than selling that data to third parties. If you have European users, this is also where you would specify the legal basis for the collection.

If you are operating an eCommerce website, for example, you should specify that personal information will be used to process payments and ship products to customers. In that case, there is a good chance that their personal information may be processed by a third party: an online payment processing service provider or your shipping partner, for example. This should all be disclosed to your customers.

Security

You should let your users know how you intend to protect their personal information from unauthorized access, which you could do by explaining your processes and where the information is stored.

You may wish to include a statement that confirms that, while you use your best efforts to safeguard your users’ data, you cannot guarantee that your website will not be subject to malware or unauthorized access and that there is always a risk when storing and sharing personal information.

Storage & Sharing

Your users should know where you will be storing their data, for how long it will be retained, and if it will be transferred internationally (this could be the case if your servers are located abroad, for example).

Along the same lines, you should be transparent about whom you share the user data that you have complied with and for what purpose. If you use analytics or advertising services, for example, you should make this clear and link to these third-party companies’ respective privacy policies.

Note that there are many other types of third parties - affiliate companies, social media networks, service providers - make sure that you consider all of them before writing your privacy policy.

Cookies

If you are using cookies, you should disclose it in your privacy policy as well as a link to the page on your website where your cookie policy is hosted. Your users should be given the option to opt out. You may wish to explain how their user experience may be affected if they do.

Opting Out & Data Subject Rights

You should explain that sharing personal information is not mandatory and that users can limit what they share, opt-out, or revoke their consent at any time. If this would affect their experience with your product or website, then you may wish to explain how.

This section should detail all the rights that users hold over their data, which can be country or region-specific, under the GDPR, for example, users have the right to request a copy of all the data that has been collected about them.

Contact Information

You should encourage your website visitors to contact you should they have any questions or concerns in regard to your privacy policy. Include your email address, street address, and phone number, along with the contact details of your data protection officer if your website is subject to the GDPR.

Other

Depending on the nature of your business, you may need to add some additional terms to your privacy policy. You will want to study applicable laws as well as the terms and conditions of all the third-party services that you use, as some require that you have specific clauses in your policy.

You should be regularly examining and updating your privacy policy to comply with ever-evolving privacy laws and take into account any changes on your website. Let your users know by sending notices and requesting fresh consent when any significant changes are made to your policy.

What are the Penalties for Non-compliance?

Fines for non-compliance with the privacy laws

As mentioned, businesses and online pages are required by law to provide and display a privacy policy on their web pages. Otherwise, they might face legal consequences for not doing so. Depending on where you live, there are different types of ramifications that come with not following the rules set for privacy laws.

To help you understand how important complying with such laws is, here are some of the penalties that come with non-compliance that you should be aware of:

CalOPPA (USA)

California Online Privacy Protection Act seeks to oversee the collection of data and private information in the United States. Violations will incur a penalty of USD 2,500 each.

General Data Protection Regulation (EU)

Failure to comply with this will result in two tiers of fines. The first tier will have you surrender 2% of your company’s annual turnover or 10 Million Euros, whichever is higher.

For a tier 2 violation, you’ll have to surrender 4% of your company’s annual turnover or 20 Million Euros, whichever is higher. In both cases, you’ll definitely lose out financially if you fail to comply with this law.

EU Cookies Directive

The penalty for violating this law includes monetary fines that reach up to GBP 500,000 GBP. Smaller penalties include notices and enforcement being sent to your company to alert you of your violation.

PIPEDA, Canada

The Personal Information Protection and Electronic Documents Act is pretty straightforward, but the fines that come with this are not cheap. Companies who knowingly breach PIPEDA requirements can be fined up to $100,000 for each violation.

As a responsible business, you should comply with data privacy acts religiously to avoid hefty fines from governments. Read up more on your local data privacy laws now to make sure that your privacy policy is in line with the standards of your local laws.

Where to Display Your Privacy Policy?

Your privacy policy should not be hidden in the legal section of your website. Your website visitors must know that it exists and thus it should be conspicuous and hard to miss. For example, this is how it's done by Google:

Example of the privacy policy link in the footer on Google.com

In addition to including a link to it in your website footer, it is good practice to remind your users that it exists at various steps in their journey. You could, for example, mention it and request their acceptance when they first create an account on your website and again during the checkout process, if you operate a transactional website.

Example of a privacy policy checkbox

Having a checkbox that needs to be ticked to confirm that they have read and agree to your terms and conditions as well as your privacy policy is good practice, as this will ensure that you have their consent and can retain evidence of such.

You should also be mentioning and linking to your privacy policy in your terms and conditions and cookie policy so that your users are given as many chances as possible to review and accept your privacy practices.

Privacy Policy Examples & Template

Click here for an article that contains examples of privacy policies from some of the biggest websites on the Internet, as well as a template that you can customize for your own use.

Final Words

The importance of having a privacy policy on your website if you collect any kind of personal information is pretty clear.

There are many ways to make sure that you comply with privacy laws applicable to your website. You can of course consult with a lawyer who will be able to advise and draft a policy tailored to your business. You could also use our privacy policy generator if you are looking for a cost and time-effective solution: after answering a few questions, a custom attorney-drafted policy will be generated.

Whatever you do, do not give in to the temptation of copying and pasting another website’s privacy policy. It may not be applicable to your business and could be lacking essential elements.

And remember, privacy policies do not only apply to websites. If you have a mobile application, you will need to equip yourself with one in order to be able to make your application available for download on the major app stores (and to be legally compliant, of course).

Over 75,000 customer have used our attorney-drafted privacy policy generator to get compliant in minutes. Don't waste time writing legal documents and avoid common mistakes. Create your privacy policy now.