A privacy policy is a document on your website that tells users how and why you collect their information, how you use that data, why you use it, and if you share it with others.
Privacy is a space that belongs to an individual, and neither governments nor companies can intrude without permission.
But we share private information all the time — our addresses, credit card numbers, birthdays, and more — at this juncture is where privacy policies come into play.
In this article, you’ll learn the answers to common questions about why a privacy policy is important, its purpose, and why you need one on your website.
Our free privacy policy generator will help you create a customized privacy policy for your website in minutes.
Key Takeaways:
Here’s a quick summary of why your website needs a privacy policy:
A privacy policy is an important legal document that informs people about your personal data collection and processing activities.
Private data fuels the modern internet, from shopping sites and libraries to that guy in Florida who bought $5,000 of diving equipment with your friend’s credit card.
The purpose of a privacy policy is to show the people you interact with that you take privacy seriously within your business.
Since many companies have online stores that collect user information, it’s vital to communicate how you collect, use, and protect their data.
While having a privacy policy is the proper thing to do, several laws also explicitly require businesses to have one, including the General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA).
For those still uncertain about why you need a privacy policy, avoiding hefty fines for noncompliance with privacy laws is a strong motivator.
Good privacy policies are short, clear, and thorough — unfortunately, not all policies meet the mark — but the clearer it is for users, the fewer problems you’ll have from misinterpretations.
The details you include in your privacy policy must comply with all applicable privacy laws, which change often to keep up with technology and public needs.
If you’d rather not risk it, you can use our privacy policy generator to stay up to date with data privacy laws.
In the past, privacy policies were long documents most people ignored — but not anymore.
The modern consumer expects to find a privacy policy on your site, and not having one could lead to other issues besides legal violations.
In the next section, I’ll describe the nine essential reasons you need a privacy policy.
I’ll start with the biggest reason businesses need privacy policies — legal compliance.
Several data privacy laws require businesses to notify consumers about the data they collect and how it gets used, and posting a privacy policy helps you efficiently meet those standards.
Businesses based in Europe or whose services are available there and monitor the online behavior of users in the European Union (EU) and European Economic Area (EEA) must comply with the General Data Protection Regulation (GDPR).
The GDPR requires businesses to follow the seven principles of privacy by design (PbD), which includes transparency over your data processing activities.
You must also have a GDPR-compliant privacy policy that meets specific legal requirements, including the following:
In the U.S., depending on what industry you work in, the following federal laws may apply and require you to have a privacy policy:
Several U.S. states also passed data privacy laws that are currently in force or will enter into action over the next few years, and all of them require a privacy policy, including the:
You can stay up to date with all new and upcoming legislation by checking out our interactive U.S. state data protection law tracker.
Data privacy laws exist worldwide, and most require a privacy policy.
For example, the following legislation governs how entities communicate their data collection and processing activities:
If you violate any of these data privacy laws, even by accident, you could face significant fines and be required to stop processing data.
Most online businesses rely on third-party apps and services to assist with various processes, and many of those services require you to post a privacy policy.
These third-party entities often handle a lot of personal information.
Due to their size, they also usually need to follow several data privacy laws and want to ensure their customers aren’t doing anything that could get them into trouble.
To prevent privacy violations from occurring, they require privacy policies to ensure their business customers aren’t in contention with applicable laws and to remove some liabilities from their own plates.
For example, Google and Apple both require anyone working with their software to use one, including for services like:
If you plan on using one of the above third-party resources or something similar, chances are high that you’ll need a privacy policy.
Posting a privacy policy describing your processing activities to consumers helps build and maintain their trust.
The modern consumer cares more about their online privacy today than ever before.
Having a comprehensive privacy policy shows your current and potential customers that you also care about the integrity and safety of their privacy.
Explaining why and how you use their data shows you care about the user experience, leading to stronger customer retention.
Online consumers understand that most websites track data about them, and they want to know what that tracking looks like and the controls they have over their information.
Keep them adequately informed by providing an accurate, up-to-date privacy policy.
Your customers want to know that you respect their privacy concerns and feel more comfortable with a business that is open about how it stores and uses their personal information.
Plus, according to the following statistics, a good privacy policy also has the added benefit of being a strong marketing tool:
People care about their privacy, and with the number of data breaches and cybercrimes increasing, it’s easy for anyone to feel scared or unsafe.
After all, they are entrusting you with intimate details about their lives.
As a reflection of your company’s values, your privacy policy can show how much you respect their security.
If nothing else convinces you to have a privacy policy, the threat of legal action should.
If you collect data without a clear privacy policy, you expose yourself to potential fines and lawsuits that can cost you more than you might expect.
For example, here’s a list of some of the biggest GDPR fines of all time:
If you want to put more concrete numbers to the penalties, here are the violations you will face for non-compliance with some major privacy acts:
Believe it or not, search engines love a good privacy policy. They prioritize websites with linked privacy policies over those without because it signifies proper security.
So, if you don’t have a privacy policy yet, adding one could help your site send better signals to search engines, improving your Search Engine Optimization (SEO).
In addition, many ad sellers require a privacy policy before running ads on your site, so not having one can severely cut your bottom line.
The laws requiring privacy policies have been around long enough that people and search engine algorithms alike will find a site much less trustworthy if it doesn’t have a privacy policy.
Websites that have privacy policies appear more up-to-date and modern than those that don’t feature one.
Technology advances at a quick pace, which impacts laws and legislation as well as user expectations, which are also constantly evolving and changing.
Privacy policies will likely be required for more uses in the future.
So, if you don’t have a privacy policy today, consumers might assume you can’t keep up with this new and changing technology — like Artificial Intelligence (AI) or Global Privacy Controls (GPCs).
Without a privacy policy accounting for new developments, you’re also opening yourself up to liabilities that didn’t exist even just a few years ago.
According to modern ethicists, having a privacy policy on your website or app is simply the right thing to do.
You expect your neighbors not to walk into your home without your permission — holding your neighbors on the internet to the same standard is essential.
If you’re using personal information from your users to enhance aspects of your business, you owe it to them to be honest and transparent about:
You also owe it to them to keep that information safe and secure from unauthorized access and data breaches.
After all, it’s their information, so treat it with respect.
Nearly everyone is a data source for companies, analysts, and even the occasional bad actors. They have the right to know what’s happening to their information to make informed decisions on who they give it to.
People are calling for greater privacy rights, and accommodating them by posting a clear, up-to-date privacy policy is an easy, effective way to make the internet safer for all of us.
Today, privacy policies aim to provide consumers with transparency and choice — a purpose that continues to grow with advancing AI access and new and amended privacy laws.
Remember, privacy policies don’t exist to make business owners’ lives harder by telling them what to do. They’re meant to inform the world about what your business does, which is why it’s such a strong reflection of your company values.
Your customers can better understand the parts of your organization that concern them, just like you get to look at aspects of their lives relevant to your services.
It’s a two-way street that will evolve and become more critical with time.
Set your business up for success today by posting an accurate, honest privacy policy.
Now that you know why you need a privacy policy, let’s discuss how to make one for your website or app.
If you want to quickly and easily make a privacy policy for your business, use a managed solution like Termly’s Privacy Policy Generator.
It does all of the hard work for you. You only need to answer simple questions about your business and its data processing activities.
The generator then makes a unique policy based on your answers, which you can easily embed on your website or app.
It includes clauses to follow several data privacy laws and works for businesses in any industry.
See what it looks like in the screenshot below.
Templates take more work to fill out, but ours is already correctly formatted and include standard clauses that appear in most privacy policies.
You just need to fill in the blank sections with accurate information about your company.
We recommend free templates for businesses that collect minimal amounts of personal data.
Writing your own privacy policy is also possible, but you should only attempt this if you have extensive legal knowledge.
Privacy policies must be easy to read and understand, but they must also contain specific information depending on what laws apply to your business.
You don’t want to risk accidentally leaving out vital information and getting fined for violating an applicable data privacy law.
Privacy policies are essential legal documents that every website should use.
Laws worldwide require businesses of all kinds to post them, and your customers expect to find one on your site.
If you use personal information from the people who visit your website for business purposes, the least you can do is keep them properly informed about your data processing activities.
Plus, free templates and comprehensive privacy policy generators make it easy to make one of these policies for your site or app. So why wait?
Masha is an Information Security and Data Privacy Specialist and a Certified Data Protection Officer. She has been a Data Protection Officer for the past six years, helping small and medium-sized enterprises achieve legal compliance. She has also been a privacy compliance mentor to many international business accelerators. She specializes in implementing, monitoring, and auditing business compliance with privacy regulations (HIPAA, PIPEDA, ePrivacy Directive, GDPR, CCPA, POPIA, LGPD). Masha studied Law at Belgrade University, and she passed the Bar examination in 2016. More about the author
