What is a privacy policy?

Data collected from customers is priceless for companies, as it can be used to enhance the user experience, improve overall product offerings, and deliver personalised offers. However, with great power comes great responsibility, and collection of data also entails safeguarding that data to protect your customers’ privacy. 

This is where a privacy policy comes in. Understanding the purpose of a privacy policy is crucial for abiding by legal and ethical best practices. In this article, we’ll look at privacy policies – what they are, who is mandated to include one on their site, and what all privacy policies must include to be valid.  

What is a privacy policy? 

A privacy policy is a statement or legal document that clearly details how a website or business collects, uses, shares, and protects the personal data of its users. A well-crafted privacy policy informs users about the types of data collected, the purposes for which it is used, and the rights they have over their personal information.

Should all websites have a privacy policy? 

Essentially, yes. Even if your website doesn’t directly collect sensitive information like credit card numbers or medical history, it is likely still collecting information such as IP address, browsing behaviour, and cookies. Let’s look at the reasons why your website needs a privacy policy.  

Legal requirements   

The biggest reason for adding a privacy policy is, of course, legal compliance. Depending on where you operate and where you’re getting visitors from, there are laws you must abide by or risk getting hit with fines. If you are based in the European Union or receive website visitors from that region, you must inform users about how their data is collected and used under the General Data Protection Regulation (GDPR).  

Is a privacy policy the same as GDPR?  

A privacy policy is a key part of GDPR compliance. GDPR itself is a broad regulation that includes data protection principles, user rights, and obligations for businesses. A privacy policy is a practical way to express GDPR requirements by explaining a business’s data handling practices in a way that users can easily understand, but adding a privacy policy alone is not the same as being fully GDPR compliant.  

Compliance and risk reduction 

By clearly outlining data handling practices, you reduce the chance of misunderstandings with users and align your site with data protection standards. Regularly reviewing the privacy policy and keeping it updated helps ensure compliance with changing regulations. 

Building trust with visitors and customers 

You should think of a privacy policy as another tool to build trust with your customers and site visitors. Transparency helps people feel respected and secure in their interactions with your site. This makes people more likely to continue engaging with your site, which helps to build loyalty with your business and eventually boost your conversions. 

Why is a privacy policy important? 

Privacy policies are needed to fulfil many legal and compliance requirements. Adding a privacy policy to your site is a necessity for businesses that collect, use, or share user data. 

Beyond fulfilling legal obligations, a privacy policy is key to building trust with your visitors. When customers see a clear and transparent outline of how their information will be collected, used, and protected, they’re more likely to feel secure and confident in your business. This assurance can improve customer loyalty, encourage repeat visits, and even make your brand stand out. 

What to include in your privacy policy 

When drafting a privacy policy, it’s essential to cover key areas to ensure compliance and transparency. Here we cover some of the primary clauses you will need to include to your privacy policy. 

Basic components 

To begin with, you should start with an ‘effective from’ date, as well as the date of the latest update to the policy. This lets the user know that the policy is already valid and if any changes have been made since the last time they perused the policy.

You should also clearly state ownership, namely the legal name of the entity that owns the site or business.  

Data collection practices 

In this section, clearly explain what types of data you collect. Be as specific as you can be about what information you’re collecting.  

Breaking it down into categories makes the information more digestible and helps users understand exactly what is being collected and when. You can also clarify at what points in the user journey the data is collected. Common data categories and touchpoints include:  

• Personal information: Data like names, email addresses, and phone numbers that are collected when someone creates an account or signs up for a newsletter or service.  
• Payment details: Financial data, such as credit card numbers or billing addresses, typically collected at checkout or when a user makes a purchase. 
• Application data: Information about how users interact with your app or website, including features used, items clicked, or search terms entered. This data is often collected through interaction logs or analytics tools. 
• Technical data: Details like IP addresses, browser selection, and device information that are often collected automatically when users visit the website.  
• Sensitive information: This includes health data or other highly personal information that might require extra security measures and explicit consent. 
• Cookies and tracking information: Data collected through cookies or similar tracking technologies, often used for site functionality, analytics, or advertising purposes. Mention if users can manage these settings through a consent banner or preferences. 

Providing this level of detail helps users make informed decisions about interacting with your site and assures them of your transparency in data collection practices. 

Data usage purposes 

In the next clause, you should detail how you plan to use the data. Breaking down each purpose into bullet points make it easier to understand even for a user skimming your policy. Some common reasons for data usage include:  

• Personalisation and marketing: Explain if user data is used to tailor content and recommendations, or if the user data might be used to send emails, newsletters, or special offers. Include details on how and under what conditions users can opt out of these communications. 
• Analytics and performance improvements: Inform users if their data is used to analyse website performance or make updates that enhance the user experience. 
• Customer support: Explain if data is used to help respond to user inquiries, address technical issues, or provide customer service. 
• Legal and security purposes: State if data might be used to detect fraud, ensure site security, or comply with legal obligations. 

Data sharing practices 

Information about your data sharing practices is another crucial aspect of the privacy policy. State any third parties with whom you may share user data and the reasons for doing so. For example, this might be: 

• Service providers: Explain if you share data with vendors who help run your website, such as payment processors or email marketing services.  
• Analytics and advertising partners: Lay out if you use Google Analytics or advertising networks that may collect and process user data.  
• Legal obligations: You may be required to share data to comply with law enforcement, which is important to note here. 

User rights  

Users have rights over their data, which may vary depending on the applicable data protection laws. Outlining these rights in your privacy policy helps show your commitment to user privacy and legal compliance. Explain what rights users have, such as the right to access their data, correct inaccuracies, or request deletion.  

Additionally, outline the process for users to exercise these rights. This should include contact methods, whether it’s a specific email or a contact form. Inform users about expected response times to their requests and whether there are limits on their rights (for example, legal requirements to retain information for a certain amount of time).  

Can you write your own privacy policy? 

Yes, you can in fact write your own privacy policy. If you include all the content you need to be compliant with applicable legislation, you don’t need to be a lawyer to write the policy yourself.  

That said, although it’s entirely possible to write the policy yourself, it can be a stressful process to make sure you’ve included everything. A privacy policy also requires frequent updates.  

If you’d rather automate your privacy policy writing and updating, you can consider using a service like Termly. It offers templates and tools to help you stay updated with evolving regulations. Termly automatically scans your website and updates the privacy policy content to reflect any additions and changes.  

Using a tool like Termly makes it easier to ensure your policy is correct, thorough, and up-to-date without requiring legal expertise. 

Privacy policy example 

To bring it all together, a sample privacy policy should include these sections: 

• Introduction – Overview of the policy’s purpose. 
• Data collection – Types of data collected (personal information, usage data). 
• Data usage – Specific uses of the data collected. 
• Information sharing practices – Disclosure of data sharing practices, if any. 
• Security – Measures taken to protect user data. 
• User rights and choices – Explanation of user rights. 
• Contact information – How users can reach out for questions or concerns. 

Including these sections ensures that your privacy policy contains everything you need to comply with legal regulations and be transparent to your visitors and customers.   

Protect customer privacy with a strong privacy policy 

A privacy policy is an essential component of any website, ensuring compliance with legal standards, reducing risk, and building trust with users. By outlining data collection, usage, and user rights, a privacy policy offers transparency and fosters confidence among users, showing them that you prioritise their privacy.