Approximately 85% of Americans shop online at least once a month. Every online transaction requires the transmission of personal information, including your name, email address, mailing address, and credit card information. To ensure your information does not fall into the wrong hands, it’s important to understand where this data goes, what it is used for, and how to tell if an online business follows consumer data privacy laws.
Here are five things you need to know about the importance of data privacy and how to protect your personal information online.
The Basics of Consumer Data Privacy:
So what is data privacy? Data privacy is the ability of individuals to control their personal information. Individuals have the right to determine who accesses their personal information and what third parties do with it.
Businesses and organizations are legally and ethically obligated to protect your personally identifiable information. The amount of personal information required for even a small business to serve its customers is significant and requires strict security to guard against data breaches and information leaks.
Data Privacy vs. Data Security
People often confuse the definitions of data privacy vs. data security. Data privacy centers around how organizations collect, store, and manage personal information. Data security refers to the protocols and technology organizations use to protect data from unauthorized third parties. Data security must be in place to ensure companies lawfully collect personal data.
Understanding data privacy vs. data security helps you be aware of how your personal information is protected, collected, and used by outside sources, including the organizations with whom you willingly share data.
1. Data Collection and Consent
Businesses and organizations collect consumer data through various channels, including websites, apps, and social media. You share personal information when you sign up for business text alerts and newsletters, follow companies on social media, or sign up for online contests or customer loyalty programs. Completing a transaction with an online business requires personally identifiable information, as does creating a customer profile on a business site.
Informed consent is an important aspect of data privacy. For people to make informed consent, data collectors must notify individuals about the kinds of data collected, why the company needs the data, and how data will be used. This information must be specific and clearly outline the purpose of all data processing operations.
2. What is Data Transparency?
Transparent data privacy allows the consumer access to information about a company's data processing in a clear, easy-to-understand format. Data transparency includes the following information and options:
- How companies process data.
- A list of all personal data collected from customers.
- Accessible privacy policies.
- The ability for customers to control what information they share with the data gathered.
- The right to delete personal information from company databases upon request.
3. Types of Consumer Data
People typically think of personally identifiable information when considering data privacy, but businesses and organizations may also track behavioral and demographic information. These last two data types are a treasure trove of information for companies and are very important to targeted marketing. Have you ever noticed that after spending a few hours browsing an online store, your social media ads suddenly match what you were looking for? That’s targeted marketing.
Personally identifiable information includes such data as:
- Address
- Bank account number
- Birthdate
- Credit card number
- Driver’s license number
- Email address
- Name
- Passport number
- Phone number
- Social media usernames
- Social Security number
Some of this information is publicly available, some (such as your name, address, and banking information) is necessary to complete transactions, and some—most notably your SSN, is usually only required by banking, healthcare, or government institutions.
Demographic information includes the following data:
- Age
- Disabled status
- Education level
- Ethnicity
- Family size
- Geographic location
- Hobbies and interests
- Income
- Marital status
- Occupation
- Political affiliation
- Race
- Religious affiliation
- Sex and/or gender
- Sexual orientation
- Veteran status
Demographic data determines how (or if) a company should approach a potential customer. A 25-year-old man in New York who enjoys stamp collecting is in a very different demographic than a 60-year-old woman in Kansas City who hikes and plays touch football.
Behavioral data, also known as interaction or engagement data, refers to the actions you take on a website. Behavioral data is not personally identifiable and provides a “big picture” of how website visitors act.
Examples of behavioral data include:
- Account creation
- Adding items to shopping carts
- Ad engagement
- Bounce rates (how long someone stays on a webpage before leaving)
- Click-through rates
- Conversions (how often people make purchases)
- Downloading and using apps
- Email engagement
- Newsletter signups
- Number of visits
- Social media and video engagement (including likes, comments, and shares)
4. Regulations and Laws
Consumer data privacy laws protect personal information and regulate what data gatherers can or cannot legally do with said data. Failure to adhere to consumer data privacy laws can result in monetary penalties issued by the governing body and may open a business up to class action lawsuits on behalf of consumers.
Data privacy laws vary from country to country and from state to state. Examples include the European Union’s General Data Protection Regulation (GDPR), and the U.S. Health Insurance Portability and Accountability Act (HIPAA).
- The General Data Protection Regulation Act applies to individuals and organizations in the European Union and requires fairness and transparency. Organizations can only gather the minimum amount of data necessary for a clearly stated purpose and cannot store data indefinitely.
The U.S. Health Insurance Portability and Accountability Act regulates the gathering, use, and storage of personal medical data. The act gives Americans the right to know and control who can access their medical data and how it is used. HIPAA protects a person’s right to privacy while allowing for the safe use and transfer of data.
5. Data Security and Breaches
A data security breach is a worst-case scenario for a company. Vulnerabilities in software, direct hacking attacks, and human error can put personal data at risk of exploitation. Robust cybersecurity measures help businesses protect consumer data. For individuals, the best way to protect data is to secure your internet connection. Your internet provider’s data security also needs to be top-notch. Satellite network security tends to be very robust, with all data encrypted on its journey from your computer to orbiting satellites, from satellites through Network Operations Centers to the internet, then back again.
How to Protect Your Data
- Use strong passwords for all online accounts.
- Be careful what you share on social media. Avoid giving out too much personal information.
- Avoid using unsecured public Wi-Fi networks
- Don't click on links or attachments in email or text messages unless you trust the sender.
- Check if online stores have secure sites. A secure site has “https” and a lock icon at the beginning of its URL instead of just “http.”
- Use antiviral or anti-malware software.
- Keep all software updated.
Privacy Policies and Transparency
A website or app’s privacy policy explains how an organization uses personal data. While hardly riveting reading, privacy policies and terms of service are important and should always be read before using a website or app.
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