Why Your Small Business Needs a Privacy Policy

by QuickBooks

2 min read

Having a privacy policy can protect your small business from potential pitfalls and give it a competitive edge.

Consumer privacy concerns affect businesses large and small, says Chris Babel, CEO of TRUSTe. Just look at what happened with the startup Path, which in February was fined $800,000 by the Federal Trade Commission for storing the private data of underage users. (Path took a pretty big public relations hit, too.)

TRUSTe develops technology to help organizations assess and develop privacy policies for their websites and mobile apps. RocketLawyer or an attorney can also assist you with drawing up a privacy policy, or you can get started with some basic guidelines from the Better Business Bureau.

Developing a Privacy Policy

No matter how you go about it, developing a privacy policy can protect your business legally and help you better communicate with your customers. A typical policy contains information about which data you collect, how that data may be used, how customers can contact you and control their personal data, and what steps you’re taking to protect their data. This helps to reassure your customers that you take their privacy seriously.

Showing customers that your business cares about privacy can also give your business a competitive edge. Consumers, after all, are increasingly wary of how much data businesses collect about them — and just what happens to it. In a survey by Consumer Reports, 71 percent of respondents said they are very concerned about companies selling or sharing personal information about them without permission.

Avoiding Legal Trouble

Still think online privacy is not much of an issue for your small business? If you run Google AdSense or Analytics on your website, as many small businesses do, then you’re likely collecting and sharing customer data in some way, since Google uses cookies to track ad views. “Most small businesses screw that one up, because they don’t know Google does that,” Babel says.

Small businesses that offer mobile apps should make privacy a priority. Why? In California, state Attorney General Kamala Harris has vowed to be tough on mobile app developers. Last October, she sent warnings to 100 companies that failed to comply with the state’s online privacy laws. In January, Harris issued a set of guidelines for mobile app developers to help protect consumers and their personal information. Meanwhile, on a national level, the White House and the Federal Trade Commission are developing a framework for consumer privacy.

In addition to drafting a privacy policy, consider taking these steps to build trust online with your customers.

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