- Ecommerce Privacy Policies Explained
- Data Privacy Laws That Affect Online Stores
- Good Examples of Ecommerce Privacy Policies
Ecommerce Privacy Policies Explained
More and more shoppers are turning to ecommerce, with sales in 2022 expected to reach $5.5 trillion and grow to $7.4 trillion by 2025. With such a high level of ecommerce traffic, businesses also collect an enormous amount of customer data.
As a result, governments require companies to be transparent about this data collection, and privacy policies are a significant component.
Your policy describes the data you will collect, process, and store, and customers are allowed to review and respond to the use of their data.
If You Collect Data
When your business collects a customer’s data, you are accessing information that can be used in a harmful manner against the customer.
Your online store may collect more data than you and your customers realize. Data is collected when your business:
- Requires or allows customer registration for access
- Uses live chat
- Receives customer service requests via email
- Connects to a customer’s social media
- Asks for a customer’s shipping or payment information
Customers directly provide their information to your business in all of these cases. However, data is also collected indirectly through, for example, cookies.
To Build Trust With Customers
A recent survey found that 84% of customers who had strong trust in their online merchants remained with them for more than a year. Return customers are vital to a business’s longevity, and trust is essential if you want to keep customers coming back.
There are many more data privacy statistics that will convince you for the need to be transparent with the way you handle data.
Privacy policies are critical to building trust with customers in the modern age.
For Protection of Minors
As the expectations and requirements for privacy policies have changed, regulators have emphasized protecting children and young people online.
The dangers of online bullying, data theft, and human trafficking have brought this issue to the forefront.
Lawmakers and business owners should prioritize minors’ safety who could accidentally put themselves at risk. Including a policy on your site with a specific clause dedicated to children’s privacy contributes to this effort.
If You Conduct Remarketing
Remarketing refers to practices like reminding site visitors of what they liked, items they still have in their shopping carts, or orders that may need to refill.
Users not informed of this process may feel that you are invading their privacy by tracking their online behavior.
Data Privacy Laws That Affect Online Stores
There are many possible regulations your online store may need to follow, but those out of the European Union (EU) and California (US) are particularly noteworthy.
General Data Protection Regulation (GDPR)
The GDPR includes several requirements for data collection and processing. Among these are specific requirements for privacy policies.
If there is any possibility that EU citizens will purchase goods or services from your online store, you must comply with the GDPR. Failure to do so can result in significant fines and damage your store’s reputation.
California Privacy Laws
California has two laws related to privacy policies.
The first is the California Consumer Protection Act (CCPA), which focuses on large businesses with revenues of $25 million or more.
The CCPA is very similar to the GDPR and requires businesses to include privacy policies with information about customers’ rights, among other things.
Another law, the California Online Privacy Protection Act (CalOPPA), is narrower in scope but broader in application than the CCPA. It applies to anyone who operates a commercial website or online service that collects personal data about Californians.
Types of Data You Collect
Telling customers that you are collecting their data is not particularly informative because the term is broad.
Instead, you must be specific about the kind of data you are processing, which might include a customer’s:
- First and last name
- Physical or email address
- Website logins
- IP address
- Credit card details
- Social security number
- Demographics — such as gender, age, race, ethnicity, religion, and sexual orientation
This information is sensitive and could be used to identify a specific individual, and some laws require its disclosure.
Why You Collect Data
In addition to knowing what data you are collecting, buyers also deserve to know why you want it and how you will use it.
Data tracking and management is a critical component of business and marketing strategies in ecommerce, but customers should understand why this particular data is necessary or relevant to your business.
For example, you might use personal data to follow up with customers who made a purchase and seek a review, provide an update on available new products, or drive targeted recommendations based on the data you collected.
In each case, you can make customers feel more comfortable with data collection by explaining how it might benefit them.
How You Protect Data
It is of the utmost importance that you treat users’ personal information on your ecommerce site with respect and consideration by implementing data security strategies to avoid data breaches.
Children and Age Limits
You should also notify them how they can opt out of this kind of data collection.
Release of Data
Likewise, your policy should indicate whether third parties monitor your customers’ activities. These include:
- Google Analytics
Most ecommerce sites have data monitoring from at least one of those companies. In addition to identifying third-party monitors, indicate how they collect and use user data.
Include a clause in your policy explaining the process customers can follow to make a data request.
Furthermore, include contact information, like a specific email address or web form, that customers can use to make the request.
Many privacy regulations require that you allow customers to submit complaints about the collection or use of their data. The easiest way to achieve this is by including the contact information of the people responsible for your ecommerce site’s policy procedures and practices.
You may also want to include a statement describing how you will inform users if you update the policy in the future.
Banners and Pop-Ups
During Sign Up
However, remember that this should not be the only place you list your policy because not every visitor to your site will follow through with buying a product from your store.
Informational Menus or Sections
Inside Other Legal Policies
Good Examples of Ecommerce Privacy Policies
The businesses below are an excellent place to begin looking at effective online store privacy policies.
First, each section is very clearly labeled. Second, the policy is written in clear and accessible language, which is fundamental to compliance with many privacy laws.
The policy is also extremely detailed.
One good example of the level of detail is the section describing customers’ privacy choices. There is an extensive list of practices, of which customers can choose to opt out, as well as an explanation of how to do so.
Costco also specifically lists the direct methods of communication, like a dedicated phone number, to make changes to customer data.
One area in which this policy succeeds where many others fail is that it directly addresses privacy concerns related to children. There is a separate clause dedicated to this issue, and Zulily provides a specific age cutoff for data collection.
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