Why Do You Need A Privacy Policy For Your Business?

We do business in a world where everything is getting increasingly digitized and automated, where data is power and where data privacy is one of the most burning global issues; so much so that data breaches have been threatening to bring even giants like Facebook and Google to their knees.

So, as a business operating in a digital platform, what can you do to ensure that you protect your business from being the target of a major litigation?

One of the most effective ways to protect your business is to devise an efficient privacy practice for your organization and that’s where a privacy policy comes in. It is a comprehensive privacy policy that often drives the privacy practices of an organization.

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What Is A Privacy Policy?

You would have come across a privacy policy on numerous occasions, often as a link provided at the bottom of a webpage.

A privacy policy essentially is a statement that informs your users, details about how you collect, store, protect, and use their personal data to which you have access. For this reason, it forms one of the most critical documents for any business, regardless of what type of digital platform you operate from.

Why Do You Need A Privacy Policy?

Before going into the reasons why you need to have a privacy policy document, it is important to talk about why data privacy is so critical. Data privacy laws across the globe are in a state of flux, constantly evolving and imposing increasingly stringent obligations on entities handling personal data to do so in a responsible manner.

In these times, when users are extremely apprehensive over potential misuse of personal data, to avoid getting meddled in enormous data misuse claims, everybody at the helm of a business needs to know the data privacy practices of their organization.

Being a responsible handler of data is not a mere option for a business. It is imperative for every business to have a thorough understanding of how to handle, store and use customer data, most importantly personal information. Being involved in the drafting of a privacy policy gives you that much-needed insight into which data privacy practices are ideally suited for your organization.

Now, let’s look at some of the key reasons why you should have a privacy policy:

Creates Transparency And Enhances Your Brand Image

 A privacy policy is a complete and transparent disclosure by your organization in detail, not just the different types of information you collect, but the details of how you store it, the purposes for which you use it and how you use it, do you share their information and if yes, why, when and with whom.

This enables your users/ customers not only to make informed decisions on what data do they want to share with you but also to be aware that when they do share their personal information, exactly what you are going to be doing with it.

Having an accurate, honest and transparent privacy policy would help project your organization as one that prioritizes its customer’s privacy and values the safety of their data.

Users Want To Know What Happens To Their Data

Every time a user provides personal details such as name, residential address, credit card details, telephone, etc., they are apprehensive of the possibility of a data misuse.

People care about how their data is used and what measures are put in for its protection. Every time you collect personal data or sensitive personal information, the users even have a right to know how the data gets used.

A privacy policy would give them the comfort of knowing exactly what measures are being put in place to protect their data.

Builds User Trust

As your users become increasingly conscious of how critical it is to protect their personal information, they would find it difficult trust any platform, which does not give them a clear picture of what happens to their data. Thus, in the current business environment, it is imperative for any business to have a comprehensive privacy policy, as a mechanism to build the trust of their users.

Irrespective of whether a user actually reads through a privacy policy in detail or not, the mere knowledge that an organization has put one in place raises the credibility and trust vested in an organization.

Third Party Service Providers You Use May Require That You Have One

 No business is a stand-alone operation and if you are on a digital platform the chances are that you have not one but multiple third-party service providers with whom you share data.

For instance, are you using services such as Google Analytics, or Google AdSense or do you intend to make your app available through App Store or Google Play? These are just some of the services that require that you have a clear privacy policy in place.

Law Requires You To Have One If You Collect Personal Information

The reason legal compliance is mentioned as the last item on the list is this – while it is critical that you always comply with the law, when it comes to privacy policy, as a prudent business practice, you should have one in place whether you are mandated by law or not.

Although Indian law mandates that you should have a privacy policy for very specific kinds of sensitive information, when you are on a digital platform, the fact of geographical presence often becomes irrelevant and the exposure of your business would not be limited to Indian laws.

While Indian law typically mandates you to have a privacy policy to be in place when you collect sensitive personal information such as passwords, bank or credit card details etc., laws of several countries require you to have a privacy policy in place for any type of personal data collected simply because your users may be located in those countries.

For instance, the General Data Protection Regulations (GDPR) put in place by the European Union (EU) would require you to adopt stringent privacy protection measures, even when you are not be located in the EU but your servers or your users are.

What Can You Do?

While it is understood that business development will be your focal point, not getting a privacy policy custom made for you is a business risk that can prove extremely crippling to the growth prospects of a business.

Creating a privacy policy tailor made for your organization should always start with an assessment, by you, of your business operations and identifying the types of data that you need to collect, the points of data collection, retention and sharing as well as the purpose of data collection, retention and sharing.

Once you have done that, the next step is to identify the security measures you need to have in place to protect your user data.

The inputs that you collate, on how you handle user data, form the backbone of your privacy policy. At this stage, it is strongly recommended that you take professional support in drafting the privacy policy from someone who can provide you with appropriately worded, legally compliant content for your privacy policy. If you do not have the necessary legal expertise in-house, it would be prudent (and profitable in the long run) to engage an external expert to draft a privacy policy for you.

While getting a privacy policy done, please ensure that it addresses at the very least the following key issues:

  • Types of information you collect
  • Purpose for which you collect the information
  • When do you share the user information
  • With whom and why do you share the user information
  • Whether you use cookies or other tracking mechanisms to track user behaviour. If yes, the fact that a user can choose to block cookies.
  • Whether you respond to do not track settings
  • Security measures adopted for data protection
  • Whether user data is stored in any other countries
  • What are the rights of the user with respect to their data

Adhering to the above list would afford your business a fair level of protection in most jurisdictions, although depending on the laws applicable to your specific business operation and the nature of your business, you may require additional provisions in your privacy policy.

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What You Should Not Be Doing?

One of the most alarming business oversights one comes across is the sheer absence of awareness in having a privacy policy (let alone a well drafted one). Even those who claim to be aware of the requirement are often unwilling to spend time or money to put a good privacy policy in place. This reluctance often stems from the misconception that privacy policy is some kind of a standard declaration that can be pulled off the Internet anytime and that it has no correlation to your actual data handling practices.

Of all the things you absolutely should not be doing when you decide to put in place a privacy policy, the following top the list:

Copy From Someone Else

It is extremely ill-advised and risky to copy and blindly adopt the privacy policy of another organization as your own because:

  • It will not always suit your business model
  • It will not reflect the actual privacy practices you have put in place
  • By posting an inaccurate privacy policy you risk legal prosecution for misleading your users about the manner you use their data
  • It will negatively affect the trust and confidence that an honest privacy generates amongst your customers

Use A Privacy Policy Generator

The above concerns will also hold true if you are getting a privacy policy done through one of those online privacy policy generators. All you may receive through a privacy policy generator would be a standard template with the name of your organization filled in, in the appropriate placeholders.

Ignore Review Of Your Privacy Policy

Even when you have decided to engage a professional to draft your privacy policy, please keep in mind – the policy needs to work for your company! Unless you are getting the document done through your in-house legal counsel, the efficacy of your privacy policy will totally depend on the inputs you provide. Unless you are willing to set aside the time to provide inputs as well as review the draft of the policy, you always run the risk of having an ineffective and more dangerously an inaccurate policy document.

Forget To Revise Your Privacy Policy

The mark of an effective privacy policy is that it will be accurate at all points of time. This would mean that before you implement any change in your business operations or practices, that makes any part of your existing one inaccurate, you need to make suitable amendments to it.

Some Best Practices

To conclude, we leave you with some best practices that you can adopt, to enhance the protection for your organization:

  1. Take an active consent from users on your privacy policy; some mechanism to ensure that a user has had a fair chance to read your terms before going ahead and sharing their data with you. A simple “I accept” mechanism would do in most cases.
  2. Ensure that your privacy policy is written in simple language, is easily readable and understandable, concise and in a legible font.
  3. Even if you do not collect any form of data, put in a privacy policy to simply tell your users that you do not collect any data. It could just be two lines you have in your privacy policy, but the goodwill such an action generates for your brand can be immense.

Always remember, what your business needs is not just any privacy policy. It needs its own privacy policy.

The content of the blog is the opinion of the author and is not intended as legal advice. 

Chandana is the legal consultant of Coffeegraphy and her specialization is in Corporate Law.


Chandana is the legal consultant of Coffeegraphy and her specialization is in Corporate Law.

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