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Do Small Business Websites Need a Privacy Policy?

Do Small Business Websites Need a Privacy Policy?

Every business website needs to have a privacy policy, no matter the size of the organization. This is because these websites collect data about visitors while they are perusing the site. When a business collects consumer data of any sort, they are legally bound to comply with globally recognized privacy laws.

If you have a business website, it’s important to become familiar with the laws governing privacy policies, the major benefits of having a privacy policy, and what happens if you don't have one.

What Is a Privacy Policy?

A privacy policy describes what data you will be collecting about web visitors and how you will use it. You can include a link to the privacy policy on the log-in page, the footer of the website, the top navigation bar, or wherever makes the most sense and is clearly visible. If you have an e-commerce store, it's also a good idea to incorporate the link to your privacy policy on the checkout page.

If you’re not a lawyer, you might be unsure of how to write a privacy policy. The good news is that you can find an easy-to-use, legally compliant privacy policy or Terms and Conditions template for websites from The Contract Shop®!

Laws Governing Privacy Policy

As mentioned earlier, there are globally recognized laws that require companies to have a privacy policy. These include:

  • General Data Protection Regulation (GDPR): This set of laws was created by the European Union (EU). All twenty-seven countries that are a part of the EU have to comply with this law. It also applies to the countries that are a part of the European Economic Area (EEA).
  • Canada's Personal Information Protection and Electronics Documentation Act (PIPEDA): This is a law that requires businesses to be transparent about how they handle user data by sharing a privacy policy on their websites. 
  • California Consumer Privacy Act (CCPA): As per this law, businesses that collect personal information from Canadian residents must have a privacy policy that discloses categories of information collected, the purpose of collection, and the rights of consumers concerning their data. These policies should also offer opt-out options for the sale of their personal info.
  • Australian Privacy Act: This is similar to CCPA but is applicable to businesses operating in Australia or selling goods and services to Australian residents.

    Although these are the most prominent laws governing privacy policies, there are others, including:

    • Personal Data Protection Act of Singapore
    • Privacy and Electronic Communications Regulations of the United Kingdom
    • General Data Protection Law of Brazil
    • Personal Information Protection Act of Japan
    • Children's Online Privacy Protection Act (COPPA) of the United States

    Each of these defines what privacy policies must cover when businesses are operating in a specific region.

    Benefits of a Privacy Policy

    In addition to legal compliance, there are several other benefits of having a privacy policy for your website.

    It Establishes Trust and Credibility

    According to a survey by TrustArc, 92% of Americans are worried about their privacy when using the internet. Naturally, this makes them hesitant when signing up on new sites or making a purchase in a new online store. 

    Given this, if you incorporate an easy-to-understand and skimmable privacy policy on your website, it will ease their worries and help win their trust. Plus, consumers are likely to buy again from you if you offer a safer experience.

    It Reflects Professionalism   

    Having a privacy policy that is prominently displayed creates a positive impression. It reflects your commitment to customer safety and data protection. Moreover, it improves your brand’s image in the eyes of your target audience and boosts the chances of conversions.

    It Reduces the Chances of Legal Consequences

    If you have a well-crafted privacy policy, it reflects your proactive efforts to meet legal obligations, which minimizes the chances of legal disputes and associated costs. If there is a dispute and you have clear operating terms in the privacy policy, it will be easier to resolve the issue.

    What Is the Penalty for Violating a Privacy Regulation?

    If you fail to post a transparent privacy policy on your website and continue to collect data, the company will be exposed to potentially large fines as per the law applicable in the region. 

    For example, if GDPR applies in your country, you'll pay 4% of your business's revenue as a fine for noncompliance; a COPPA violation could lead to fines of $50,000 or more for each instance. In addition to monetary losses, a business could suffer from major damage to its reputation and lose customers. 

    The Takeaway

    Do I need a privacy policy and Terms and Conditions? Absolutely! If you’re unsure of how to draft these documents for your website, The Contract Shop is here to help.

    These legalities should be clearly posted on all websites—for businesses large and small—to make sure that visitors understand how their personal data is being used and how information on the website can be used.

    Kevin Gallagher
    Kevin Gallagher

    Kevin Gallagher is the CEO of The Contract Shop®, a contract template store for creative entrepreneurs, freelancers, coaches, and more. His background is in helping online businesses grow, having previously worked at Allbirds managing part of their operations. He is proud to report that his digital artist wife Mandy is a happy customer of The Contract Shop®, and his main motivation is to help as many people like her as possible with the tools that they need to confidently manage their businesses.

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