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What Is Data Privacy? Significance, Legal Requirements, & More

by Jul 20, 2023Data Privacy0 comments

What Is Data Privacy? 

Businesses use customer data so they can provide a better experience for current and potential customers. However, customers deserve to have a say in what you do with their data.

In simple terms, data privacy means that customers need to have control over how their personal information is collected, managed, and shared by companies that have access to it. Since it is their information, they get to decide what happens to it.

There are several different layers to personal information. For example, you wouldn’t mind sharing your first name with someone you just met at a party, but you wouldn’t share your social security number (SSN) or home address with just anyone—potentially not even close friends.

Data privacy regulations are created to protect your personally identifiable information (PII). This information includes any data that can be used to identify a person, such as their full name, phone number, or email address.

Other industries also have specific information they consider to be private and needs protection. For example, the medical industry has Personal Health Information (PHI)  such as appointment scheduling notes, biometric data, or test results. Financial institutions should protect Payment Card Industry (PCI) data such as credit card numbers, bank account numbers, or the cardholder name.

All in all, every time you explore the internet—whether you’re browsing social media, looking for household items on Amazon, or just a simple Google search—you’re leaving behind a digital footprint that companies can collect, use, and store.

It can be alarming how easy it is to build a picture of your life from your digital footprint. For this reason, companies are required to adhere to strict digital security standards that will ensure that user data is protected at all times.

The Importance of Data Privacy

As a business, you can collect data and use it to learn more about your customers: What they like, what they don’t like, their habits, and more. This can be a good thing when it leads to personalized ads or improved services. But, it can also have negative consequences if it’s not managed properly.

Mishandling customer data can lead to legal complications, hefty fines, and a damaged reputation. So, understanding data security and privacy isn’t just beneficial—it’s necessary for any business that collects and uses customer data.

Data privacy protection protects your customers’ personal information from being misused. It involves keeping sensitive data safe from hacking and identity theft.

By following the required data privacy regulations, your business can make sure that you’re protecting your customer data to the best of your ability.

Plus, when your customers trust that their data will be handled responsibly, they will be more likely to willingly share information. This data, in turn, can be used to derive valuable insights that you can use to create better experiences for your customers.

For example, you can use customer data to identify trends and preferences—allowing you to tailor your marketing campaigns to better meet your customers’ expectations. Or, you could use it to identify areas where your services could be improved, helping you to provide a better customer experience.

Data Privacy Legal Requirements

There are several different regulations you might need to adhere to, depending on factors like your industry or location. Compliance with these regulations helps businesses avoid legal repercussions, hefty fines, and damage to their reputation.

Fair Information Practices

The Fair Information Practices Principles (FIPPs) serve as the backbone of data privacy law. Most modern data regulation laws use the FIPP as a privacy framework for their guidelines. The FIPPs include privacy principles across different scenarios, such as data management, data storage, and data sharing.

  1. Access and Amendment: As a marketer, you should provide your customers with the ability to access and correct their personal information that you have. For example, if you have an online portal, customers should be able to log in and update their details as needed.
  1. Accountability: Your company needs to follow these principles and other privacy laws. This means keeping track of how you’re handling customer data and training your team on these rules. For instance, regular audits and team training sessions can help ensure compliance.
  1. Authority: You should only collect and use customer data if you have the right to do so. This could be a clause in your terms of service or privacy policy that customers agree to. Always be transparent about why you have the authority to collect their data.
  1. Minimization: Data collection and retention should only be done for a specific, legal reason. For example, if you’re running an email marketing campaign, you don’t need to collect customers’ physical addresses. Keep data only as long as necessary for your purpose.
  1. Quality and Integrity: Make sure the customer data you collect is accurate and up-to-date. This means regularly cleaning your databases to remove outdated or incorrect information. Accurate data not only ensures fairness to customers but also improves the effectiveness of your marketing campaigns.
  1. Individual Participation: Involve your customers in decisions about their data. This could mean asking for their consent when collecting data or providing a platform for them to voice their privacy-related concerns. This also means that consent can be retracted whenever they want. On top of that, you also need to create a way for data owners to request the removal of their data. For example, a simple checkbox asking for consent to send promotional emails can go a long way in building trust.
  1. Purpose Specification and Use Limitation: Be clear about why you’re collecting customer data and stick to it. If you collect email addresses for a newsletter, don’t use them for other purposes unless you’ve clearly stated this in your privacy policy or received additional consent.
  1. Security: Protect your customers’ data like it’s your own. Implement cybersecurity and analog safeguards like encryption and two-factor authentication to prevent unauthorized access. Remember, a data breach can not only lead to legal trouble but also damage your brand’s reputation.
  1. Transparency: Be open about how you handle customer data. This means providing clear and accessible information about your data practices in your privacy policy and any related communications. Transparency builds trust, and trust builds customer loyalty.

While these principles aren’t written in any particular legal privacy requirement, these 9 principles are the foundation of many clauses written in each regulation.

General Data Protection Regulation (GDPR) 

GDPR is a strict data privacy regulation implemented to protect European Union citizens. But don’t be fooled by the ‘European’ part: this law applies to any company that processes the personal data of people living in the EU, no matter where the company itself is located.

So, even if you’re based in the US, the GDPR’s jurisdiction applies as soon as you have customers in the EU, which is the case for many SaaS companies.

The GDPR imposes a hefty fine on companies that don’t follow their rules. For severe violations, you can be fined up to 20 million Euros or 4% of your global turnover in the previous fiscal year, whichever is greater. Smaller violations aren’t much better, you can be fined up to 10 million Euros or 2% of your global turnover in the previous fiscal year.

At a high level, here are the 10 key requirements listed in the GDPR:

  1. Lawful, fair, transparent processing: You should only process customer data with a valid reason and be clear about it.
  2. Limitation of purpose, data, storage: You should only collect necessary data, use it for the stated purpose, and delete anything collected after it’s used.
  3. Data subject rights: Customers can access, correct, and delete their data. They’re also able to object to processing.
  4. Consent: You should get clear permission for new data uses, and consent can be withdrawn whenever the customer wishes.
  5. Personal data breaches: You should record and report data breaches within 72 hours.
  6. Privacy by Design: Design all processes to protect customer data.
  7. Data Protection Impact Assessment: Assess data protection impact for new projects.
  8. Data transfers: Ensure data protection when transferring to third parties.
  9. Data Protection Officer: Appoint an officer for large-scale data processing.
  10. Awareness and training: Keep your team updated on GDPR requirements.

California Consumer Privacy Act (CCPA)

The California Consumer Privacy Act (CCPA) is a state-level information privacy law. Its purpose is similar to the GDPR; it grants California residents the right to know what personal data businesses collect about them, the purposes for which it is used, and whether it is sold or disclosed to third parties. Residents also have the right to access their data, request its deletion, and opt out of its sale.

Just like GDPR, if you have customers in California, you need to follow the rules set by the CCPA. This is the case for most modern businesses, especially those operating online and based in the US.

The fines for the CCPA can rack up quickly. It uses a per-violation basis and counts each time a consumer’s rights are violated. An intentional violation equals up to $7,500 in fines, while an unintentional one equals up to $2,500 in fines.

Additional Data Privacy Laws

GDPR and CCPA are the most talked about privacy laws in the privacy space. However, there are other regulations in place, especially if you’re in sensitive industries, such as health care or finance.

Here are some other data privacy laws in effect:

  • ISO 27001 compliance: This one’s an international standard that sets out the requirements for an information security management system (ISMS). It helps organizations keep their information assets secure. If you’re handling sensitive consumer data, getting ISO 27001 certified can be a great way to show your customers that you’re serious about protecting their data.
  • FISMA compliance: The Federal Information Security Management Act, or FISMA, is a U.S. privacy legislation that requires federal agencies to implement a program to provide information security for their information and information systems. If you’re doing business with the federal government, you’ll need to make sure you’re FISMA compliant.
  • SOX compliance: The Sarbanes-Oxley Act, or SOX is a U.S. law that protects investors by improving the accuracy and reliability of corporate disclosures. It requires companies to establish internal controls and procedures for financial reporting to reduce the possibility of corporate fraud. If you’re a publicly traded company, SOX compliance is a must.

In addition, other states are forming their own data privacy policies. For example, Virginia recently became the second state after California to implement its own comprehensive state-level data privacy law. And similar laws in Colorado, Connecticut, and Utah are set to go into effect this year.

There are also other data protection laws for a specific use case or demographic. For example, Health Insurance Portability and Accountability Act (HIPAA) and Children’s Online Privacy Protection Act (COPPA) protect medical and children’s data respectively.

Ensure Consumers Are Protected With Deep Sync

Data privacy is a critical aspect of any business that handles customer data. Following these rules ensures legal compliance, but data privacy also builds trust with your customers and protects their rights.

By understanding and adhering to data privacy principles and regulations like the FIPPs, GDPR, and CCPA, you can ensure that your business respects and protects the data your customers trusted you with.

In addition, you can support your marketing efforts with privacy-safe audience data from a data partner like Deep Sync. Deep Sync is SOC 2 Type II certified, is a member of the ANA, and applies consumer opt-outs across all states, not just California.

Skip the collection and maintenance process and get high-quality, up-to-date data for your marketing campaigns. See the types of data Deep Sync can provide.


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