More and more people are becoming increasingly aware of shady privacy practices and how allowing companies to collect data can potentially endanger them.
But are there enforceable legal documents that can protect customers from unfair or deceptive data collection and usage?
Fortunately, privacy policies exist for this reason!
If a company collects personal information, they are obligated to safeguard user privacy in accordance with existing legislation and future amendments.
Keep reading to learn everything more about the legalities of privacy policies!
Are Privacy Policies Legally Binding?
Any website or app you can access today likely has clickthrough agreements because most companies collect information from their users. Disclosure of this practice is legally required.
Accepting any of these agreements is essentially entering into a contract with a business. In exchange for access to their website, for example, they can use a visitor’s personal information.
SIDE NOTE: A contract is a legal document that imposes legal obligations on parties that enter it. Should any party fail to uphold their part, they may be subject to litigation and punished by law.
When it comes to collecting data, especially personal information, DISCLOSURE and CONSENT are two of the key elements to establishing enforceable agreements between users and a business.
As mentioned above, privacy policies are required by law, whether for a website or app or when using a third-party service. Collecting information is a practice that must be disclosed.
Any customer data that the company collects, notably personally identifiable information, must be the amount that a reasonable person deems relevant and sufficient.
So, for those trying to access a website or an app with mandatory privacy policies, users MAY or MAY NOT agree to give personal information depending on their desire to work with them.
Some people agree solely to be able to use a website or app. Take note that these businesses may comply with the privacy policies of third-party services they use (e.g., Google Analytics).
Some refuse to enter into these agreements because they do not feel confident with the data protection offered or are uncomfortable with the amount of personal information asked for.
Careful handling of personal information is very important. Identity theft, scamming, and phishing are some of the problems that fair privacy policies are trying to prevent.
When a company collects personal data and uses this collected information in ways that are unfair and inconsistent with its privacy statement, some legal questions may be asked.
In the United States, the Federal Trade Commission is one of the main bodies that act in the interest of the public against businesses and organizations when it comes to data protection.
Depending on the violation of privacy policies and the damages incurred by consumers, they may take law enforcement action, which brings about many negative effects to a business:
- The first that comes to mind is monetary. There are large fines imposed for failing to safeguard customers’ personal information as promised or using them for deceptive practices.
- There are also legal fees the organization would need to settle. These can collectively cost organizations millions, though small businesses may be affected as well if they are not careful.
- Apart from straightforward monetary losses sanctioned by law, companies who have mishandled customer data may also suffer a reputational injury that can see a decline in users.
The Different Privacy Laws You Need to Remember
There are applicable laws that form a legal framework for the process of collecting personal information and its usage.
Privacy Laws in the US
Currently, there are no federal laws that pertain specifically to privacy policies in the United States.
In lieu of that, there are provisions for specific circumstances regarding data privacy in existing federal laws.
An individual state may also have its own law on data collection and use.
Take note of these for your business’ website or digital service or for your legal protection if you are a customer. These are not limited to but include:
Federal Trade Commission Act
- The FTC enforces privacy policies pledged to consumers about their personal information.
- Section 5 of the FTC Act forbids “unfair and deceptive” commercial activities, i.e., marketing practices.
Children’s Online Privacy Protection Act (CoPPA)
- This law necessitates parental consent prior to data collection about or aimed at individuals under 13 years of age.
Electronic Communications Privacy Act (ECPA)
- The Electronic Communications Privacy Act safeguards wire, oral, and electronic communications.
- Data stored electronically are also protected by this legislation.
Computer Fraud and Abuse Act (CFAA)
- This act penalizes the accessing of data and computers by unauthorized individuals. Its main purpose is to make hacking illegal.
- Its provisions include the protection of the financial records of corporations as well as small businesses.
California Online Privacy Protection Act (CalOPPA)
- This state law is primarily addressed to those running commercial websites.
California Consumer Privacy Act (CCPA)
- This legislation gives California customers more rights to manage their personal data gathered by businesses more closely.
- These rights include:
- Informing California consumers about what personal information is collected and how this data is used and shared.
- Deleting the collected personal information upon request (with some exceptions).
- To have businesses not sell collected personal information.
- And to not be discriminated against for exercising the abovementioned rights.
Privacy Laws in the EU
The European Union has enacted legislation that safeguards the privacy of EU consumers. It is enforced on all services dealing with EU residents and individuals located in the EU.
General Data Protection Regulation (GDPR)
- The Regulation has strict requirements to have clear and accessible privacy policies for consumers.
- It takes the place of the Data Protection Directive, strengthening its provisions and unifying the process of the collection of personal data.
Privacy Laws in the UK
As the United Kingdom is no longer part of the European Union, the General Data Protection Regulation (GDPR) does not apply to them.
However, they have absorbed the Regulation’s privacy compliance requirements in their own implementation of the GDPR. Have a quick look at its features below:
Data Protection Act
- The act makes Privacy Policies mandatory for all services dealing with UK consumers.
- It safeguards consumer data, whether it is digitally stored or physically, via a paper filing system.
Privacy Laws in Canada
The Office of the Privacy Commissioner of Canada highlights the benefits of having good privacy policies in place to meet legal obligations and cultivate customer trust.
They enforce a federal privacy law to protect user data. Here are some of its main provisions:
Personal Information Protection and Electronic Documents Act (PIPEDA)
- This act requires that privacy policies be free or have minimal use of jargon and clauses which are excessively complicated.
- It also requires that the information gathered may only be used for the stated purposes.
Privacy Laws in Other Countries
Personal data privacy is also protected by several laws in other countries. Collection practices, as stated in privacy statements, must be honored within the information technology space.
See below for a brief rundown of privacy laws enforced in other countries:
- Australia: Privacy Act 1998
- Brazil: General Data Protection Law (LGPD) (requires disclosing the identity and contact information of data controllers)
- China: Personal Information Protection Law (PIPL)
- Singapore: Personal Data Protection Act (PDPA)
- South Korea: Personal Information Protection Act (PIPA)
Any website, app, or other online services may likely work with third-party applications, for instance, Google Analytics or the Apple App Store, to enhance their services or reach.
Even a simple website can track information about its users for several reasons. To comply with laws making privacy policies necessary, third parties also require them.
This is because if the data collected also falls into their hands, they carry the extended responsibility to keep it private and protected.
Check out the regulations of your desired third-party service for a suitable policy.
The Limitations of Privacy Policies
Protecting the customer’s data is an important endeavor. Not only do privacy policies have to live up to their promises, but they also need to be clear about the management of said data.
These should help consumers understand the agreement they are entering (or not entering) into by laying out what they can expect about the use and protection of their data.
In addition, being transparent about collection practices helps businesses create more trust with their consumers than by being vague about the data handling policies implemented.
Importantly, businesses that provide coherent and transparent privacy policies are probably better shielded from paying fines, being subject to litigation, etc., regarding their practices.
For instance, your service does not collect personal data about your consumers’ marital status. Then one tries to sue you, claiming you sold that information for unfair marketing activities.
It is also relevant for businesses to disclose how customers’ data is shared with and used by third-party services they work with. Outlining this information can inspire confidence.
Frequently Asked Questions
Here are some answers to questions commonly asked about privacy policies:
What Is the Purpose of Privacy Policies?
There are a few reasons privacy policies exist and are made necessary by law, but the first (and likely most crucial) is to ensure that consumers’ data is protected and respected.
There are many problems that can arise from personal data being compromised. For instance, identity theft and scams can cause substantial injury to anyone who may be victimized.
Another goal it can accomplish is to establish trust between a service and its user. Since there are known threats to having one’s data compromised, it makes sense not to easily give it away.
Finally, many third-party applications, such as the Apple App Store, Google Analytics, etc., require businesses to have privacy policies before operating with their service
The means of collection (i.e., via websites, apps, etc.) do not matter so much as the fact that there is data being collected. The purpose for collection also has to be disclosed.
In terms of timing, you need to have one already in place at the point when you start collecting personal information. Though updates are inevitable, an initial one is necessary.
Customers have to be aware of and agree to their data being collected, stored, distributed, etc., for any of these practices to be legal. They also need to know should these policies be altered.
The right to privacy is something to take seriously, and businesses, by collecting personal data, are assuming responsibility for safeguarding the privacy of the individuals they serve.
The key difference between the two lies in which entity the agreement primarily exists to protect, though both have provisions that can safeguard the clients and the companies.
Terms and conditions primarily exist to shield and support businesses. This document establishes what is and is not allowed by the service and the penalties for those who violate it.
For example, any copyright and intellectual property a company owns cannot be stolen by clients. In the event that one does, they may pursue action against the individual.
In the spirit of privacy policies acting as agreements for users to “sign” via a clickthrough popup or otherwise, the document’s provisions are indeed legally binding.
Violating its terms can cause great harm to a company’s reputation, which can see the loss of customers. Fines and penalties await those who do not honor a policy’s promises!
Across the globe, there are plenty of laws that exist to secure the privacy of consumers, giving them the right to know and provide consent about how their data is collected and distributed.
Feel free to return to this article if you need further guidance on how privacy policies work in the legal arena!