Why Your Business Can‘t Afford to Skip a Privacy Policy in 2021
In today‘s digital-first world, few things are as critical for businesses as maintaining customer trust. And one of the most fundamental ways to build that trust is by respecting customer privacy through transparent, robust data practices.
At the heart of this is the privacy policy—a clear statement of how your company collects, uses, shares, and protects people‘s personal information. Far from a nice-to-have, a privacy policy is mandatory for most businesses in 2021, thanks to a growing web of laws and regulations on data protection.
Consider this: 85% of consumers will not do business with a company if they have concerns about its privacy practices.^1 Meanwhile, 79% say they are willing to share their data if a company is transparent about how it will be used.^2
In other words, people are paying attention to how businesses handle their information, and they‘re ready to walk away from those they don‘t trust. Having a clear, compliant privacy policy is key to easing concerns and building confidence in your brand.
Still not convinced you need one? Let‘s dive into the top reasons a privacy policy is a must in 2021, and how you can create an effective one for your business.
Reason 1: It‘s Required by Law (In Most Places)
The most pressing reason to have a privacy policy is that it‘s likely legally required for your business. A patchwork of privacy laws and regulations has emerged around the world in recent years, most of which mandate some form of disclosure to consumers about data practices.
Some key examples:
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GDPR: The European Union‘s General Data Protection Regulation (GDPR) sets strict rules for processing the personal data of EU individuals. It requires a clear privacy notice covering specific points, and applies to any company that markets to or monitors the behavior of EU residents.^3
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CCPA: The California Consumer Privacy Act (CCPA) gives California residents the right to know what personal data is being collected, how it‘s used, and with whom it‘s shared. Businesses must provide notice of these practices.^4 The law applies to many companies doing business in California or handling the data of California residents.
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PIPEDA: Canada‘s Personal Information Protection and Electronic Documents Act (PIPEDA) requires organizations to provide clear information about their data practices and obtain meaningful consent for collection and use of personal data.^5
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LGPD: Brazil‘s General Data Protection Law (LGPD), which came into effect in 2020, requires clear disclosure to individuals about the collection and use of their personal data.^6
Other privacy laws are in place or proposed in Australia, Japan, South Korea, India, and several U.S. states. While details vary, the common thread is transparency. Individuals should be told in clear terms what data is collected, why, how it‘s used, with whom it‘s shared, and what their rights are.
Failing to post a proper privacy notice can lead to hefty fines, lawsuits, and reputational harm. For example:
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In 2019, the French data regulator fined Google €50 million under GDPR for not properly disclosing its data practices to users.^7
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Online advertising company Criteo was hit with a proposed $65 million class action settlement in 2020 for allegedly violating user privacy by tracking them without sufficient notice or consent.^8
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Facebook agreed to pay $9.5 million to settle Canadian claims that it misled users about how their personal data was shared with third-party apps.^9
In short, regulators and courts are cracking down on inadequate privacy disclosures. Smart businesses in 2021 will proactively meet or exceed the strictest requirements to avoid trouble down the line.
Reason 2: Consumers Expect (and Reward) Transparency
Beyond avoiding legal issues, having a clear privacy policy is simply good business in an era of growing privacy concerns. Consumers have become increasingly wary of how their personal data is captured and monetized, and they want more control over it.
According to Cisco‘s 2021 Consumer Privacy Survey^10:
- 86% care about privacy
- 79% are willing to spend time and money to protect their data
- 47% have switched companies over data policies
A privacy policy is one of the most visible signals of your commitment to transparency and sound data practices. It‘s a chance to explain in your own words how you respect people‘s information and give them choices.
When done right, this can be a powerful differentiator and trust-builder. Apple, for instance, has made privacy a core part of its brand, with policies and practices that go well beyond the legal minimum.^11 Results include some of the highest customer loyalty and satisfaction rates in tech.^12
Other companies known for strong privacy stances, like DuckDuckGo and Brave, have seen usage soar as consumers seek out more privacy-friendly alternatives to Google and others.^13
The upshot is that investing in a robust privacy policy, and living up to its promises, can help you win long-term customer trust and stand out from competitors. As privacy concerns mount, this will only become more important.
Reason 3: It Sets Internal Standards
A privacy policy isn‘t just an external statement—it should reflect how your company actually operates. Developing a strong policy requires you to review your current data practices, identify gaps and risks, and implement policies and training to meet your commitments.
Used this way, a privacy policy becomes a vital internal document to ensure sound, consistent data governance across the organization. It helps get everyone on the same page about privacy principles like:
- Limiting data collection to what‘s needed
- Being transparent about practices
- Using data ethically and legally
- Protecting data from unauthorized access
- Giving individuals control over their data
With a clear policy and plan to execute it, employees are in a better position to make smart privacy decisions day-to-day. This could head off costly mistakes and ensure key requirements don‘t slip through the cracks as your business grows and changes.
In fact, Gartner predicts that by 2023, 65% of the world‘s population will be covered by modern privacy laws.^14 Baking privacy compliance into your company culture and operations now could save significant headaches later.
How to Develop a Robust Privacy Policy
Convinced of the need for a privacy policy? Great. Let‘s walk through the essential steps to create an effective one.
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Do a data audit: Start by mapping out all the personal data your business collects across departments and systems. Note what‘s collected, how it‘s used, where it‘s stored, who can access it, and how long it‘s kept. This lays the groundwork for your policy.
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Determine your legal requirements: Based on where you operate and who you serve, which privacy laws apply to your business? The major ones to consider are GDPR, CCPA, PIPEDA, and LGPD. Also check for any industry-specific rules (e.g., HIPAA for health data).
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Outline your policy: Using the strictest applicable standards as a guide, draft an outline covering key points like what data you collect, your purpose for collecting it, how you use and share it, how you protect it, and what choices people have. Write in clear, straightforward language.
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Develop notices: Different laws require specific disclosures or consent mechanisms at various points, like when data is collected, when it‘s shared, or when it‘s used for a new purpose. Plan out what notices you need, and how and where you‘ll provide them.
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Implement choices: Look for ways to give people control over their data, like letting them access what you have, delete it, opt out of sharing or selling, or limit certain uses. Provide clear instructions on how to exercise these rights.
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Plan for requests: Under laws like GDPR and CCPA, individuals can ask to access, change, or delete their data. Have systems in place to authenticate and fulfill these requests in a timely manner (usually 30-45 days).
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Secure the data: Describe the security measures you use to protect the data you collect, like encryption, access controls, and employee training. If you share data with third parties, discuss their security as well.
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Have a breach plan: Explain how you‘ll notify people if their data is compromised in a breach. Include the legal deadlines for notification and what support you‘ll offer to those affected.
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Get legal review: Have your draft policy reviewed by expert counsel to ensure it covers all the necessary legal points for your business and is consistent with actual practices.
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Publish and update: Post your final policy prominently on your website or app, and anywhere else you collect personal data. Let people know when you make significant updates.
Of course, a privacy policy is only as effective as your adherence to it. So have an accountability plan for executing on the promises you make. This could include:
- Regular employee training on privacy principles and practices
- Appointing a privacy point person to oversee compliance
- Instituting Privacy by Design to build privacy into new products and features
- Conducting periodic audits to identify gaps or outdated practices
- Carefully vetting partners and third parties that access personal data
Conclusion: Privacy as Business Asset
In a world where data is often called the new oil, how you handle privacy can be the difference between winning long-term customer trust and losing it all with one misstep.
A clear, robust privacy policy offers significant advantages in 2021:
- Meet expanding legal requirements to mitigate risk
- Improve customer confidence and loyalty by being transparent
- Stand out from less-protected competitors
- Strengthen data governance through clear internal standards
Ultimately, respectful data practices are about more than having a legal disclosure—they need to be core to your company culture and customer relationships. By approaching privacy as a business imperative, not just a compliance check-box, you can turn it into a powerful brand asset.
So make this the year you level up your privacy policy, both as a public commitment to your customers and as an internal guide for principled data stewardship. It‘s not just a smart defensive move, but an investment in winning trust in the privacy-conscious decade ahead.
