A privacy policy is a document that details how a company or or­ga­ni­za­tion handles any in­for­ma­tion it gathers. It should reveal the in­for­ma­tion it plans to collect such as site visitor name, address, credit card number, etc. If data is to be left on a user’s computer (such as cookies), this should be specified alongside in­for­ma­tion on whether the customer’s data will be shared or sold to third parties.

When are privacy policies mandatory?

Regulated by the Federal Trade Com­mis­sion (FTC), the laws sur­round­ing privacy policies in the United States are complex and vary from state to state. While laws are relaxed in certain areas, the state of Cal­i­for­nia, for example, has strict laws requiring all owners of com­mer­cial websites to include a privacy policy. This strict set of consumer privacy guide­lines has been in place since 2003 and was enacted by the Cal­i­for­nia Online Privacy Pro­tec­tion Act (CalOPPA) and was the first law in the United States to establish far-reaching consumer data handling laws for online busi­ness­es. Website operators living in the US should, therefore, take care to ensure that their site is in ac­cor­dance with their re­spec­tive state’s laws. However, federal law does require that specific companies and websites provide privacy policies. These include websites targeted at children under 13 years old, health care service websites, and financial in­sti­tu­tions.

The issues sur­round­ing data col­lec­tion are certainly con­tro­ver­sial. A great deal of data is saved au­to­mat­i­cal­ly, often without the user’s knowledge. For example, web servers record IP addresses in log files, in­te­grat­ed social media icons pass on personal details relating to social network profiles, and cookies save in­for­ma­tion about users and their online behavior. The data security issues sur­round­ing website analytics tools, such as Google Analytics, are also con­tro­ver­sial, as the tool records data like IP addresses. Website operators can avoid requiring users’ consent for gathering data by ab­bre­vi­at­ing the IP address down to the last set of digits, which thereby anonymizes data.

Note

When it comes to IP addresses, the legal situation has been unclear for a long time. Recently, however, the European Court of Justice has found that it is possible to trace a link between an IP address and real personal data through an in­di­vid­ual’s Internet provider. This means that IP addresses should also be treated as personal data, seeing as they can be used to create someone’s digital footprint whilst browsing online.

Since most websites collect data these days, every website should contain a privacy policy. In this way, operators remain on the safe side legally and provide an important service for their visitors.

Note

On May 25, 2018, the EU’s General Data Pro­tec­tion Reg­u­la­tion came into force. This may be of interest to you if you do business in Europe. You can find out what companies and website operators need to pay attention to in the future in our GDPR checklist.

What are the sanctions for non-com­pli­ance with privacy policy laws?

Those found guilty of breaching data security laws can receive extensive penalties and sanctions. In addition to pros­e­cu­tion costs, in­junc­tions, and com­pen­sa­tion costs, offenders who do not provide adequate data security could also receive fines of up to $16,000 under the FTC Act. However, punitive measures vary widely depending on the actions of the per­pe­tra­tor, the severity of the violation, and the number of people affected.

For example, fraud­u­lent col­lec­tion or dis­tri­b­u­tion of personal data can also result in further penalties and a jail sentence of up to five years. This can increase to ten years and a fine of up to $500,000 for an in­di­vid­ual or $1 million for a company if the crime has been committed in con­junc­tion with further vi­o­la­tions, or if the per­pe­tra­tor has sold data for personal profit.

Under the Health Insurance Porta­bil­i­ty and Ac­count­abil­i­ty Act (HIPAA), health care providers, phar­ma­cies, and other in­sti­tu­tions or companies that handle medical in­for­ma­tion can be subject to fines ranging from $100 to $1.5 million, depending on the severity of the offense.

In­cor­po­rat­ing a privacy policy into your website

If you are required to have a privacy policy on your website, you should ensure it is as ac­ces­si­ble as possible. The privacy policy used by IONOS can be easily found on the website under Terms and Con­di­tions, or you can simply jump straight to the privacy policy statement. You should present the statement as a separate page with a clearly marked link on the main menu. It is also essential that the privacy policy is easy to un­der­stand, so it is advisable to use simple language and avoid complex legal or technical terms. In terms of content, it is vital that the in­for­ma­tion is accurate and un­am­bigu­ous. This is also the case if you have an imprint on your website if you do business in Germany, Austria, or Switzer­land. Ensure that the links set for this purpose are not obscured by other elements such as banners and that the privacy policy is visible in different browsers and on all end devices (PC, tablet, smart­phone, etc.).

It is also important to include the following in­for­ma­tion in your privacy policy:

  • A summary of the technical data collected and/or passed on (i.e. IP addresses, email addresses, etc.)
  • A summary of the personal data collected and/or passed on (i.e. name, address, etc.)
  • Data trans­ferred from browsers (e.g. browser history)
  • In­for­ma­tion about special features, like sweep­stakes, online ad­ver­tis­ing, etc.
  • If required, in­for­ma­tion on the use of web analytics tools such as Google Analytics
  • Actions taken to ensure the security of data
  • In­for­ma­tion about the user’s right of objection

Rep­re­sen­ta­tive contact details

Some state leg­is­la­tion may require your privacy policy to provide contact in­for­ma­tion should a customer have a query regarding the policy or their data use. Despite this not being a federal law, it is becoming more and more common and con­sid­ered best practice to include a point of contact. Privacy policies may include the name, postal address, email address, or telephone number of the privacy policy rep­re­sen­ta­tive. Here is a sample of what the relevant paragraph in your privacy de­c­la­ra­tion may look like:

Sample contact details:

Name of the in­di­vid­ual(s) re­spon­si­ble

1562 Main St

Eureka, CA

95502

Tel: (telephone number)

Email: sample@email.com

Support with privacy policies: templates and gen­er­a­tors

Many free online solutions help with gen­er­at­ing privacy policies for websites. Existing templates are available and it is easy to find one that is suitable online. Prewrit­ten templates are another option. These include valuable in­for­ma­tion on the pro­tec­tion of user data and can be applied to social networks, cookies, or newslet­ters. This gives users the added advantage of receiving data pro­tec­tion state­ments from Google Analytics or other analysis tools. These are delivered in filled-out forms and include links for users who object to their data being delivered to third parties.

In addition to the many templates that are available, some websites also offer free privacy policy gen­er­a­tors which assemble sample texts to produce a final statement. The result is usually given as an HTML code.

Templates and gen­er­a­tors make it easy to draft a suitable privacy policy for your website. However, it is important to be diligent to ensure that the results are relevant to your specific website. Templates can provide a great basis for your statement, although there are often details that need changing or elab­o­rat­ing on. If you are unsure whether your privacy policy is correct, it is advisable to seek advice from a legal expert.

Changes in EU law: the GDPR

The General Data Pro­tec­tion Reg­u­la­tion (GDPR)

is a reg­u­la­tion in EU law on data pro­tec­tion and privacy and affects those within the European Union (EU) and the European Economic Area (EEA). The main goal of this reg­u­la­tion is to give citizens and residents more control over their data and what happens to it. With all EU countries adhering to the same reg­u­la­tions, it makes business between countries a lot easier. All companies doing business in the EU or EEA must store personal data using pseu­do­nymiza­tion or full anonymiza­tion, as well as the highest privacy settings possible. It cannot be publicly available without the in­di­vid­ual giving prior consent. If a data breach occurs, busi­ness­es must report it within 72 hours in case customer data is at risk.

Although the GDPR was adopted on April 14th, 2016, it wasn’t enforced until May 25th, 2018. Since it is a reg­u­la­tion, it doesn’t require a national gov­ern­ment to decide on any leg­is­la­tion.

The 54,000-word document can be sum­ma­rized into these points:

  • Companies must obtain users’ per­mis­sion in much more detail before using any of it for marketing or ad­ver­tis­ing purposes.
  • Users must be able to download their own data in a format that they can take to a competing service. This is known as “data porta­bil­i­ty”.
  • Users must be able to inspect all the data collected by the company and amend anything if needed as well as having the option to delete it if they don’t want the company to possess it anymore.
  • Users are now able to challenge al­go­rith­mic decisions that affect them and request that humans make these decisions instead.

What do the EU changes mean for the US?

The US doesn’t have any legal equiv­a­lent to the GDPR since most states have their own laws governing data breaches and no­ti­fi­ca­tion re­quire­ments. Normally, only a limited amount of data is used, namely social security numbers and health or financial in­for­ma­tion.

Although es­tab­lish­ing a Data Pro­tec­tion Agency has been proposed to the US Senate, it has not been acted upon as of yet. This means that the United States is one of the few democ­ra­cies in the world that does not have a federal data pro­tec­tion agency. This is quite shocking since the United States was once a global leader on privacy, es­pe­cial­ly when the Fair Credit Reporting Act was passed in 1970. Since then, the US has been overtaken by the EU when it comes to privacy laws.

Although these GDPR changes are for countries in the EU, companies in the US will have to adapt to them if they do business in any European countries. It makes sense to rewrite your privacy policies for Europe, otherwise you could find yourself being fined for not adhering to them.

Note

Are you a IONOS customer? Here you can find a Checklist es­pe­cial­ly for IONOS customers with all the in­for­ma­tion website operators need to bear in mind so that their website complies with the General Data Pro­tec­tion Reg­u­la­tion.

Facebook is an example of a company that needs to comply with these laws. In April 2018, Facebook CEO, Mark Zucker­berg testified before the US Congress

Facebook is an example of a company that needs to comply with these laws. In April 2018, Facebook CEO, Mark Zucker­berg testified before the US Congress about data privacy. The subject of GDPR came up quite often, but EU officials weren’t satisfied with the answers he gave to many of the questions. At the beginning of 2018, at least 87 million Facebook users had their data leaked to third parties. In 2019 Facebook had to pay the FTC an eye-watering $5 billion fine for its various privacy vi­o­la­tions. All the more reason to adhere to the GDPR laws, which aim to protect users from future data leaks and give them more control over what happens to their personal in­for­ma­tion.

The changes state that if there’s a data breach, users should be notified within 72 hours. An example of a company that needs to act dif­fer­ent­ly this time around is Equifax, a consumer credit reporting agency, which spent weeks in 2017 trying to stop a data breach attack and deciding what to do about the damage before the company even thought to notify customers. If this were to happen now the GDPR is in place, the company could be handed a hefty fine – just like Facebook was. Here are some sample privacy policies that US website operators dealing with EU users can take into con­sid­er­a­tion to ensure that they are compliant with GDPRs. In order to be compliant, your privacy policy must cover the following aspects.

Legal foun­da­tions for data pro­cess­ing

It is your duty to inform uses of the legal basis for col­lect­ing and pro­cess­ing personal data. To do this, at least one of the following con­di­tions must be fulfilled in ac­cor­dance with Article 6 of the GDPR:

  • The subject has given their consent
  • Pro­cess­ing data is necessary to fulfil a contract with the subject or for carrying out pre-con­trac­tu­al op­er­a­tions
  • The con­troller fulfils a legal oblig­a­tion to which they are subject
  • The purpose of pro­cess­ing is to protect the vital interests of the data subject or another person
  • The data pro­cess­ing is in the public interest
  • It is necessary to safeguard the le­git­i­mate interests of the con­troller or of a third party (provided that the fun­da­men­tal rights and freedoms of the subject are not infringed).

Sample of providing a legal basis

Insofar as we have obtained the consent of the subject for the pro­cess­ing of personal data, Article 6(1)(1a) of the GDPR applies as the legal basis.

Where the pro­cess­ing of personal data is necessary to fulfil a contract with the subject or for pre-con­trac­tu­al measures initiated by the data subject, Article 6(1)(1b) of the GDPR provides the legal basis.

If the data pro­cess­ing is the result of a legal oblig­a­tion to which we are subject, we refer to Article 6(1)(1c) of the GDPR as the legal basis.

Where personal data is processed in order to protect the vital interests of the subject or another natural person, Article (6)(1)(1d) of the GDPR  serves as the legal basis.

If the data pro­cess­ing as a task serves the public interest or takes place in exercise of official authority, we refer to Article 6(1)(1e) of the GDPR as the legal basis.

Insofar as the pro­cess­ing of personal data is necessary in order to safeguard the le­git­i­mate interests of the controller or a third party without jeop­ar­diz­ing these interests, fun­da­men­tal rights or fun­da­men­tal freedoms of the subject, Article 6 (1)(1f) shall apply as the legal basis.

Purposes of data pro­cess­ing

In addition to the legal basis, you must list the purposes for pro­cess­ing the relevant data-related in­for­ma­tion in your privacy statement. In order to achieve trans­paren­cy, we recommend that you disclose any com­po­nents of your website that collect this data, including:

  • Contact forms
  • Newslet­ter sub­scrip­tion
  • Input fields (e.g. for entering bank details in a shopping cart)
  • Tracking codes
  • Third-party plugins (e.g. social buttons)
  • Third-party content (e.g. YouTube videos)
  • Com­pe­ti­tions
  • Cookies
Note

When it comes to embedding external content, you will need to exercise even more caution in the future, since the GDPR increases the need to inform the user before data pro­cess­ing. However, third-party content like YouTube videos transmit data by default when the website is accessed. Google has already reacted to this and im­ple­ment­ed an “extended data pro­tec­tion mode” in YouTube’s embedding options. If you enable this, you will generate an embed code that will not transmit data until the video is viewed.

If the pre­vi­ous­ly mentioned Article 6(1)(1f) of the GDPR is relevant to your website, you should also reveal your le­git­i­mate interests in your privacy policy. When doing this you should check whether you are pro­tect­ing the interests and rights of your website’s users in the best possible way. Typical purposes are, for example, analyzing visitor behavior to optimize the website, to deliver per­son­al­ized content for marketing purposes.

Template for in­di­cat­ing the purposes of data pro­cess­ing

In order to make your visit to our website as user-friendly as possible, and to provide you with all the available features, we collect specific data from the device you used to access our website. This data includes your:

  • IP address
  • Operating system
  • Browser type and version
  • Date and time of access

An eval­u­a­tion of this data for marketing purposes will not take place.

Re­cip­i­ents of personal data

If you pass personal data along to third parties, you must also inform your users of this as part of the data pro­tec­tion de­c­la­ra­tion. For example, if you run an online shop, you are very likely to include other service providers such as suppliers or payment services in your business process.

This segment also includes im­ple­men­ta­tions of third-party cookies and ex­ten­sions, the use of which has always been linked to the dis­clo­sure of personal in­for­ma­tion. These include tracking codes and social media buttons. In both cases, you can indicate a le­git­i­mate interest to justify the use – however, it is advisable to also obtain the visitors’ consent (in the case of social media buttons, the use of a data pro­tec­tion compliant procedure like the two-click solution is a good idea).

You should also include ad­ver­tis­ing services like Google AdSense or AdWords as re­cip­i­ents if you use them for Internet users to find your website.

Sample of spec­i­fy­ing embedded third-party vendors (example: “Facebook Plugin”)

This website uses a Facebook social plug-in developer by Facebook Inc. (1 Hacker Way, Menlo Park, Cal­i­for­nia 94025 USA) and is rec­og­niz­able by the Facebook logo. The plugin es­tab­lish­es a direct con­nec­tion between your browser and the Facebook servers once it has been activated. This requires a click on the ap­pro­pri­ate button. We have no influence what­so­ev­er on what kind and to what extent your data is trans­mit­ted to Facebook Inc. A statement by the social media company on this topic can be found via the following link.

Note

If you intend to disclose personal in­for­ma­tion to a recipient in a third country or to an or­ga­ni­za­tion that operates in­ter­na­tion­al­ly, you should also disclose this intention in your privacy policy.

Duration of data storage

In order to make data pro­cess­ing as fair and trans­par­ent as possible, you should also disclose how long personal data will be stored for. If no clear value can be for­mu­lat­ed for this, you can instead present the criteria that influence the period of data storage. As a rule, for example, you can provide concrete in­for­ma­tion for the storage of anonymized IP addresses in the log-files if you have con­fig­ured automatic deleting after a certain period of time. If, on the other hand, you work with cookies that make the visitor iden­ti­fi­able for the duration of the session, the length of that data storage is linked to each in­di­vid­ual session duration.

Sample of a data storage duration spec­i­fi­ca­tion

All personal data that we have collected during your visit through the use of session cookies is au­to­mat­i­cal­ly deleted as soon as the purpose for its col­lec­tion has been fulfilled. The session data is therefore stored until you end your session (by leaving or closing the website).

Note

If you store the personal data on servers outside the EU, this must be stated in the data pro­tec­tion de­c­la­ra­tion of your website – including reference to possible different data pro­tec­tion reg­u­la­tions in the server’s location.

Reference to the data subject’s rights

All EU users from whom you collect personal in­for­ma­tion have several rights, also known as “data subject’s rights”. For example, the right of access specified in Article 15 GDPR grants detailed in­for­ma­tion on pro­cess­ing purposes, possible re­cip­i­ents, storage period and origin. In addition, users have the right to rectify personal data under Article 16 GDPR and – under certain con­di­tions – the right to delete personal data under Article 17 GDPR.

Sample of reference to data subject’s rights

According to the GDPR, you are con­sid­ered a data subject if you are an EU visitor to our website and personal data con­cern­ing you is processed by us. For this reason, you can make use of various data subject rights which are laid out in the General Data Pro­tec­tion Reg­u­la­tion. These are the right to access in­for­ma­tion (Article 15 GDPR), the right to erasure (Article 18 GDPR), the right to object (Article 21 GDPR), the right to lodge a complaint with a su­per­vi­so­ry authority (Article 77 GDPR) and the right to data porta­bil­i­ty (Article 20 GDPR). 

Clar­i­fi­ca­tion of legal or con­trac­tu­al oblig­a­tions to collect data

To the extent that the provision of personal data is required by law or contract or is in­dis­pens­able to com­plet­ing a contract, you must inform your users ac­cord­ing­ly. It is also necessary for you to provide in­for­ma­tion about the con­se­quences of not providing such in­for­ma­tion.

Sample of clar­i­fy­ing data col­lec­tion oblig­a­tions

The col­lec­tion of your personal data is in­dis­pens­able for com­plet­ing a contract, as well as ful­fill­ing con­trac­tu­al oblig­a­tions and services. If you do not provide us with the requested in­for­ma­tion, neither a suc­cess­ful con­clu­sion of a contract, nor further con­trac­tu­al services are possible.

In­for­ma­tion on the use of automated decision-making (including profiling)

If you use automated decision-making, including profiling, you are required to provide mean­ing­ful in­for­ma­tion about the un­der­ly­ing logic. It is essential that you identify the desired impact and scope of this kind of data pro­cess­ing on the data subject. The back­ground is that, in principle, your users have the right “not to be subjected to a decision based ex­clu­sive­ly on automated pro­cess­ing – including profiling” as stated in Article 22 GDPR. However, this right does not apply if the re­spec­tive automated procedure is necessary to conclude or carry out the contract, is permitted by EU and member state leg­is­la­tion or is carried out with the express consent of the person concerned.

Sample reference to automated decision making or profiling on your website

Before con­clud­ing your contract, we will carry out a fully automated credit as­sess­ment to determine your credit wor­thi­ness…

Rep­re­sen­ta­tive Contact Details

Best practice requires your privacy policy to have contact in­for­ma­tion available should a customer have a query regarding the policy or their data. Privacy policies may include the name, postal address, email address or telephone number of the privacy policy rep­re­sen­ta­tive. Here is a sample of what the relevant paragraph in your privacy de­c­la­ra­tion may look like this:

Sample contact details:

Name of the in­di­vid­ual(s) re­spon­si­ble

1562 Main St

Eureka CA

95502

Tel: (telephone number)

Email: sample@email.com

Does my company need a Data Pro­tec­tion Officer?

The GDPR stip­u­lates that if your business deals with customers in the EU (including the UK despite Brexit), whether for business trans­ac­tions or data pro­cess­ing, you will need to comply with their Data Pro­tec­tion Officer (DPO) re­quire­ments. The job of the Data Pro­tec­tion Officer is to safeguard personal in­for­ma­tion gathered through trans­ac­tions with EU customers. This includes any sensitive in­for­ma­tion that could range from credit card in­for­ma­tion to something that can help you identify a person’s ethnicity, location, religion, sexual ori­en­ta­tion, etc.

The GDPR stip­u­lates that all public au­thor­i­ties and private companies that are involved in large-scale, regular data pro­cess­ing of EU residents comply with these reg­u­la­tions. If you are unsure whether your company fits this de­scrip­tion, the best course of action is to seek legal counsel as the reper­cus­sions for failing to adhere could be severe. More in­for­ma­tion about data pro­cess­ing officers can be found here.

If you need to hire a DPO, you must include their contact in­for­ma­tion in your website’s privacy policy. Here is a sample of what their contact in­for­ma­tion could look like in your privacy policy:

The data pro­tec­tion officer of this company is:

Name of the in­di­vid­ual(s) re­spon­si­ble

1562 Main St

Eureka CA

95502

Tel: (telephone number)

Email: sample@email.com

Many free online solutions provide as­sis­tance for gen­er­at­ing privacy policies for websites such as the solution from FreeP­ri­va­cy­Pol­i­cy. Existing templates are available, and it is easy to find one that is suitable for your needs with a simple Google search. Prewrit­ten samples are a further option. These include valuable in­for­ma­tion on the pro­tec­tion of user data, and can be applied to social networks, cookies, or newslet­ters. This gives users the added advantage of receiving data pro­tec­tion state­ments from Google Analytics or other analysis tools. These are delivered in filled-out forms and include links for users who object to their data being delivered to third parties.

In addition to the many templates that are available, some websites also offer free privacy policy gen­er­a­tors, which assemble sample texts to produce a final statement. The result is usually given as an HTML code.

Templates and gen­er­a­tors make it easy to draft an adequate privacy policy for your website. However, it is important to take care and ensure that the results are relevant. Samples can provide a great basis for your statement, although there are often details that need changing or elab­o­rat­ing on. If you are unsure whether your privacy policy is correct, it is advisable to seek advice from a legal expert.

GDPR: A summary of the most important points

The General Data Pro­tec­tion Reg­u­la­tion makes data pro­tec­tion in EU countries more trans­par­ent, un­der­stand­able and secure. The need for a complete, com­pre­hen­sive privacy statement is at the heart of this – es­pe­cial­ly for website operators who have to deal with vast amounts of personal data. If you have already drafted a privacy statement in the past, you will have noticed the dis­clo­sure of legal bases and the reference to users’ rights as major in­no­va­tions in the above points.

Of course, these two aspects are by no means the only things dis­tin­guish­ing the revised or newly created data pro­tec­tion state­ments following the GDPR standard from older versions. Now, more than ever, you have the re­spon­si­bil­i­ty of ex­plain­ing the purpose of data pro­cess­ing in a detailed, com­pre­hen­sive way that leaves no open questions for your users. If your users do have questions, however, you or your DPO must be available to answer them. The GDPR em­pha­sizes that users must be informed as early as possible – always before data is collected.

Tip

You are welcome to use our new GDPR-compliant privacy policy as a source of in­spi­ra­tion for your own privacy policy.

If your website deals with EU visitors, it is important to make sure your privacy policy covers the GDPR reg­u­la­tions. However, be sure not to neglect local state and federal laws. As always, consult a legal pro­fes­sion­al so you know that your privacy policies are legally wa­ter­tight for the regions you interact with, and so that you don’t ac­ci­den­tal­ly break the law and incur con­sid­er­able legal penalties.

Click here for important legal dis­claimers.

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