Creating a Privacy Policy for Your Online Business

In the world of online business, privacy policies are a must. The increased frequency of identity theft, online fraud, and spamming all heighten customer insecurities when shopping online.  A good privacy policy can be instrumental for business owners attemptingto ease customer concerns and solidify their reputation as a trusted online retailer.

Online privacy policies differ from business to business. Information included in your privacy policy should be tailored to fit your business's individual needs, but there are a few key points that every business should remember. For an example, check out Business.gov's Privacy Policy.

Describe how personal information is collected and used. Your online privacy policy should clearly tell your customers what they can expect from using your website and describe how their personal data is collected and used:

• Many online businesses use cookies to store user preferences or shopping cart contents. Clarify your business's policy on using cookies - text stored on a users computer by a web browser in your privacy policy.

• Share how personal information collected in any capacity will be used.  Customers should know that their information will only be used to complete their transaction, and that any further contact or continued use of their information is voluntary. Customers should also have the option to not have their contact information sold or distributed.

• Provide users with contact information in case they need further information or have a problem with privacy or security issues with your online business.

Privacy policies should be prominently displayed. If your privacy policy is hidden deep within your website, users may become suspicious of how secure the site is and leave to shop somewhere they trust. By conspicuously displaying your privacy policy, it shows customers that you take privacy and security seriously and your business has nothing to hide. Make sure to provide access to your policy in multiple areas including product pages, shopping cart, and at checkout.

Clarify your site's opt-out policies. Customers should have an opportunity to opt out of having their information distributed and all further business communications.Privacy policies should always make it easy for customers to receive the information they want and not receive any communication they do not want. If your business sends weekly electronic newsletters or emails with special offers, customers should clearly be given the choice to receive further communication or not. If they originally choose to receive a newsletter and later decide they no longer want to, they should easily be able to opt out at anytime.

Once you post a policy, stick to it. Posting a privacy policy gives customers a sense of security when using your site. If you are making constant and drastic changes to your policy, or not following at all, your business will lose credibility. Adherence to your privacy policy proves to customers that you take their personal information seriously.  At the same time, technology changes rapidly and privacy policies should be updated regularly to account for the most accurate and current information. The date at which your site was last updated should be clearly stated on your privacy policy.

Consider obtaining a seal of approval. Reputable online businesses look for ways to validate their privacy and security practices. Commercial privacy service companies like TRUSTe can help you create a privacy policy or review one that you already have in place, and provide a seal of approval for qualifying websites. To maintain quality standards, the company will usually perform annual audits of your privacy policy. If you choose to obtain a seal of approval, there are usually associated fees.

For more information, check out the Federal Trade Commission's guide to Privacy Policies: Say What You Mean and Mean What You Say.

Additional Resources

• Federal Trade Commission - Privacy Initiatives

• Starting an Online Business

Message Edited by NicoleD on 01-25-2010 01:37 PM