Crafting an Effective E-Commerce Privacy Statement: A Step-by-Step Guide
As an e-commerce business owner, protecting your shoppers' privacy should be at the top of your priority list. Not only is it an essential way to...
5 min read
Capturing website visitor information has become a common practice, but it comes with significant legal responsibilities. Over the years, “data brokers” have built lucrative businesses by gathering and selling sensitive personal data from visitors who browse websites. This information is treated as a commodity and is often sold to advertisers and government agencies, who use it to create targeted advertisements. This guide will help you understand how to collect visitor data responsibly while ensuring compliance with legal regulations and protecting consumer privacy.
Legal GPS Pro
Protect your business with our complete legal subscription service, designed by top startup attorneys.
- ✅ Complete Legal Toolkit
- ✅ 100+ Editable Contracts
- ✅ Affordable Legal Guidance
- ✅ Custom Legal Status Report
Data Collected for Online Behavioral Advertising (OBA)
Websites collect visitor information to understand user preferences for marketing, advertising, and content management purposes. They gather data such as the number of visits, time spent on the site, and the type of browser used. Some sites also track location-based data and searches, which can be used to create ads specifically tailored to users.
Tools for Capturing Visitor Information
There are several tools and techniques commonly used to capture visitor data:
-
Third-Party Cookies, Web Beacons, and Plug-Ins: These tools are used to monitor user interactions and browsing activities. Third-party cookies, in particular, are often used by advertising networks to track user movements across multiple websites. While these cookies can have legitimate purposes, they also raise privacy concerns.
-
Web Analytics Tools: Tools like Google Analytics collect valuable statistics to assess user behavior, including content viewing patterns and preferences within a site. Google Analytics, for example, is used by 57% of the 10,000 most popular websites.
-
Advertising Analytics: These tools help assess the effectiveness of advertising campaigns across different sites.
-
Social Media Trackers: Social media platforms like Facebook and Twitter can track user activities even after they leave the platform. Facebook, for instance, has arrangements with companies like DataLogix to track purchases made by users who have seen specific ads.
Understand consumer privacy laws and protections
Regulation of Online Behavioral Advertising (OBA)
While there is currently no specific federal law that directly targets OBA, the practice is still subject to certain self-regulatory guidelines. The Federal Trade Commission (FTC) has established four key principles for Online Behavioral Advertising that businesses must follow to ensure transparency and consumer protection.
Key Principles of OBA Regulation
-
Transparency and Consumer Control
Companies must clearly and effectively inform users when their information or behavior is being recorded. Users must also be given an easy way to opt out, such as ticking a box or clicking a button. This ensures that users are aware of and can control data collection practices.
Example: Include a banner on your website that informs users about cookies and provides an option to decline tracking.
-
Data Limitations Based on Privacy Policy
Companies cannot use, rent, or sell consumer information for purposes that are not disclosed in their privacy policy. Even if a privacy policy is not posted, the FTC can take action against companies that engage in unfair or deceptive information-sharing practices.
Example: If your privacy policy states that data is only used for marketing purposes, you cannot later share that data with third-party advertisers without user consent.
-
Reasonable Security and Limited Data Retention
Even if the data you collect is not directly identifiable, you are still required to protect it. "Reasonable security" depends on the sensitivity of the data and the available means of protection. Limiting data retention to only what is necessary also helps minimize liability.
Tip: Store personal data securely and delete it when it is no longer needed.
-
Affirmative Consent for Material Changes to Privacy Policies
If you make material changes to your privacy policy, you must inform your users and allow them to opt out of the new terms. Affirmative consent means that users must explicitly agree to the changes, rather than simply remaining silent.
Example: Send an email to users notifying them of changes to your privacy policy and include a link where they can agree to the new terms.
-
Affirmative Consent for Using Sensitive Data
For sensitive data, such as personal finances, health, or information about children, you must obtain explicit consent before collecting or using this data for behavioral targeting.
Example: If your website collects health-related information, you should include a checkbox for users to provide explicit consent before any data is collected.
Legal GPS Pro
Protect your business with our complete legal subscription service, designed by top startup attorneys.
- ✅ Complete Legal Toolkit
- ✅ 100+ Editable Contracts
- ✅ Affordable Legal Guidance
- ✅ Custom Legal Status Report
Additional Regulations to Consider
In addition to the FTC's principles, other regulations may apply when capturing visitor information. These include:
-
Children's Online Privacy Protection Act (COPPA): Governs the collection of data from children under the age of 13.
-
Health Insurance Portability and Accountability Act (HIPAA): Regulates the use of health information.
-
State Laws: Various state laws also apply to online privacy, such as the California Consumer Privacy Act (CCPA).
Although compliance with the FTC's principles is technically voluntary, certain actions that violate these principles may still qualify as "deceptive practices" under the Federal Trade Commission Act. Therefore, it is important to ensure compliance to avoid potential penalties.
Consequences of Non-Compliance
Failure to comply with privacy regulations can have serious repercussions, including:
-
Loss of Access to Visitors or Website Closure: Regulatory authorities may block access to your site for users in regions where you fail to comply with privacy policies.
-
Restitution or Damages: Violators may be required to pay restitution or damages to affected users.
-
Fines or Imprisonment: Severe violations can lead to substantial fines or even imprisonment for deceptive practices.
-
Loss of Consumer Trust: Violating privacy expectations can lead to a significant loss of trust, resulting in decreased user engagement and sales.
For example, if your website fails to inform users about data collection practices, you may face fines from regulatory bodies, and your customers may choose to stop using your site altogether, leading to a loss of revenue.
Best Practices for Capturing Visitor Information
To minimize risk and ensure compliance, consider the following best practices:
-
Provide Clear Disclosures: Make it clear to users what data is being collected and how it will be used. Use simple language that is easy to understand.
-
Allow Users to Opt Out: Always provide a clear and simple way for users to opt out of data collection or tracking.
-
Limit Data Collection: Only collect data that is necessary for your business operations. Avoid gathering excessive information that could increase your liability.
-
Secure Collected Data: Use encryption and other security measures to protect collected data, and limit access to authorized personnel only.
-
Regularly Update Privacy Policies: Keep your privacy policy up to date, especially if your data practices change. Inform users of any updates and obtain their consent when required.
Conclusion
Capturing website visitor information can be a valuable tool for understanding your audience and improving your business, but it comes with legal obligations. By following the FTC's principles for Online Behavioral Advertising and ensuring compliance with other applicable laws, you can protect your business and build trust with your visitors. Always be transparent about your data collection practices, provide users with control over their information, and take appropriate security measures to protect sensitive data.
Do I need a business lawyer?
The biggest question now is, "Do I need a business lawyer?” For most businesses and in most cases, you don't need a lawyer to start your business. Instead, many business owners rely on Legal GPS Pro to help with legal issues.
Legal GPS Pro is your All-In-One Legal Toolkit for Businesses. Developed by top startup attorneys, Pro gives you access to 100+ expertly crafted templates including operating agreements, NDAs, and service agreements, and an interactive platform. All designed to protect your company and set it up for lasting success.
Legal GPS Pro
Protect your business with our complete legal subscription service, designed by top startup attorneys.
- ✅ Complete Legal Toolkit
- ✅ 100+ Editable Contracts
- ✅ Affordable Legal Guidance
- ✅ Custom Legal Status Report
Legal GPS Pro: All-in-One Legal Toolkit
100+ legal templates, guides, and expert advice to protect your business.
Trusted by 1000+ businesses
Privacy Policy and Terms of Use for Blogs: Essential Guide
Blogging has become a popular way to share information, build communities, and even generate income. However, the nature of blogs being publicly...
Privacy Policies: Why You Need One and What To Include
While launching a website, the things that get maximum attention are the about us page, logo, graphics, SEO, etc. The legal pages, like terms of use...