From lifelong dreams to sudden flashes of innovation, people start their own businesses for many reasons. The one thing they all have in common is that they require customers. In addition to money, customers often provide information in exchange for their purchase, including but not limited to their name, address, credit card or bank account information, and email address. If you collect this information in your business, you are legally required to protect that information. However, even before collecting that information, growing startups are legally required to have privacy policies that inform consumers about this data collection, including details about when, where, and how this information is collected, used, and shared.
As a new business, you may not know exactly which policies you must have or what to include. An experienced Florida business formation attorney at Clearwater Business Law may be able to assist you with creating and implementing the appropriate policies for your business, understanding the steps you need to take to protect customer data, and what to do if your business experiences a data breach. Call (727) 502-6874 to schedule an appointment to learn more about protecting your customers’ data and your business from liability due to a privacy breach.
What Are Privacy Policies and Why Do Growing Startups Need Them?
Most states in the United States and many other countries have laws requiring businesses to have privacy policies. These policies are written legal documents that explain how the company collects, uses, stores, shares, and protects the personal information of its customers and website visitors. While this may seem like something that can be created with a template, these policies are unique to each company, as every business collects different information, stores it in distinct ways, and uses and shares it in various ways. Therefore, while the general components are the same, each business’s privacy policy should be tailored to its particular methods.
Aside from the fact that these policies are often required by law, growing startups should also implement them as a sign of good faith with their customers. Particularly when an individual is considering doing business with a new company that they have not heard of before, a privacy policy that spells out what information will be collected, how it will be used and shared, and how the company will ensure it does not get stolen or shared with others provides peace of mind and confidence that the company can be trusted.
What Are the Essential Components of a Strong Privacy Policy?
When growing startups draft and implement their privacy policies, essential components must be included. The details within each component will vary from one business to another, and new businesses may want to consult with an attorney to ensure their policies include all the appropriate information.
What Data Is Collected
Every privacy policy must explicitly state what kind of personal information is collected from consumers. This information includes:
- Direct Identifiers: Direct identifiers are information that can be linked directly to an individual. These include names, physical addresses, telephone numbers, and email addresses.
- Online Identifiers: Online identifiers are information that can identify a person’s location and devices when they use a particular website. These include IP addresses, browser data, and device information.
- Financial Information: This includes the payment details provided when making a purchase. These are often handled through third-party processors. This information will include the name of the third-party processor, why the information is shared with them (payment processing, fraud protection, etc.), and a link to the third-party processor’s privacy policies.
- Behavioral Data: This includes analytics and tracking technology usage metrics.
Informing consumers of this information can help with legal compliance and may prevent issues in the future.
How and Why Data Is Collected
Businesses must explain the methods and purposes behind the data collection. When describing the processes by which they collect data, companies must include all collection methods, including website forms, cookies, or integrations with third-party services. The purposes must consist of all legitimate purposes for which the business collects information, including creating user accounts, processing orders, sending marketing emails, or improving its services.
Additionally, businesses must include a data minimization statement. This simply states that the company only collects the data necessary to achieve its identified business purposes. This is done to align with regulations such as the General Data Protection Regulation (GDPR). The GDPR may apply to Florida businesses if they offer goods and services to or monitor the behavior of European citizens.
How Data Is Used and Shared
This component helps build transparency with consumers and also ensures compliance with data protection laws. In this section, businesses should clearly and specifically indicate each use case for the information collected. For example, it should be clearly stated if the data is used for transaction processing or to provide customer service, and which specific pieces of information are used for those purposes.
If any information collected is shared with third parties, that information must also be identified, as well as who the information is shared with and why. A startup’s privacy policy should also explicitly identify if any information is used for marketing purposes, and if so, provide users with an easy method of opting out of such use. If information is used for personalizing content, targeted advertising, tracking user behavior, or improving website performance, this should also be clearly stated with significant detail about how that process works.
User Rights and Choices
While a business owner may believe that continuing to use a website or purchasing from the business should be considered consent to using the information provided, privacy laws do not agree with that idea. Instead, these laws ensure that people continue to have the right to decide how their information is handled, including being able to access, correct, or delete it and withdraw consent or opt out of data sharing at any time.
Therefore, a small business’s privacy policy should provide detailed information about how users can access, correct, or delete their information. The policy should also explain how they can withdraw consent or opt out of data sharing. Additionally, these processes should be as simple as possible for the user.
Data Retention and Security
Businesses should outline their data retention policy and security measures in this component. They should ensure that data is not kept longer than necessary and explain how it is disposed of or destroyed when it is no longer needed. They should also explain what protection measures they use to protect the data while they retain it, such as encryption. This can be a crucial component, as the measures listed here will be cited if a data breach occurs and users’ information is exposed or used to cause harm.
Cookies and Other Uses of Tracking Technologies
While most businesses and websites use cookies today, disclosing this information to users is still essential, particularly regarding non-essential cookies concerning the GDPR. Businesses should also disclose any other tracking technologies they use. Finally, they should provide detailed information explaining how users can manage their consent for cookies and other tracking technologies.
Business Contact Information
Businesses should provide precise contact details so users can contact them if they have concerns about the business’s privacy policy or other data inquiries. This contact information can be a phone number, email address, or web form, but it should identify a specific individual or department (such as a Data Protection Officer or Data Protection Office) who handles all privacy-related matters. Businesses must provide at least one easily accessible contact method. This complies with various privacy laws and shows users that the company takes their privacy seriously and wants to address their concerns efficiently and promptly.
Essential Privacy Policies Laws for Growing Startups in Florida
Growing startups need to be aware of several state, federal, and international laws related to privacy and privacy policies when creating their policies. These laws place specific requirements on the business regarding what information to include in their policies, what information they can collect, and what they must do with it. Sometimes, these laws will only apply under specific circumstances, such as meeting a specific revenue threshold or serving residents of a particular state or country. However, the company must examine these laws individually and evaluate when and how they may apply to ensure its privacy policy meets all legal requirements. An experienced Florida business formation attorney at Clearwater Business Law may be able to assist your business in reviewing privacy laws and your policies to ensure compliance.
Florida Digital Bill of Rights
The Florida Digital Bill of Rights (FDBR) is found in FL. Stat. § 501.701 and imposes data privacy regulations on for-profit legal entities that collect personal information from Florida consumers. While it indicates that it applies to companies with an annual global revenue of more than $1 billion, the rules related to sensitive information apply to all businesses. Additionally, even if a business does not meet the other requirements to comply with the FDBR, businesses may still want to ensure compliance to provide peace of mind to consumers and avoid having to rewrite their privacy policy in the future if or when they meet the other requirements.
Florida Information Protection Act
The Florida Information Protection Act (FIPA) is found in FL. Stat. § 501.171. FIPA mandates the data security measures and breach notification procedures that businesses must follow when they collect personal information from Florida consumers. FIP applies to any commercial or government entity that acquires, maintains, stores, or uses Florida consumers’ information, regardless of where the business is physically located. This law provides requirements such as taking reasonable measures to protect data and notifying affected individuals of a breach within thirty days.
California Consumer Privacy Act
The California Consumer Privacy Act (CCPA) or California Privacy Rights Act (CPRA) may apply to Florida startups with California customers. If these laws apply, the company may be required to offer California consumers specific rights or display a “Do Not Sell or Share My Personal Information” link on its website.
General Data Protection Regulation
The General Data Protection Regulation (GDPR) is an international law that requires businesses to have a lawful reason for processing data, obtain explicit consent for certain information uses, and respect consumer rights, including their “right to be forgotten.” The “right to be forgotten” is officially known as the right to erasure and allows consumers to request the deletion of their information.
Children’s Online Privacy Protection Act
The Children’s Online Privacy Protection Act (COPPA) applies to any business whose website or online service collects personal information from children under age thirteen. This federal law requires those businesses to post a clear privacy policy, provide direct notice to parents about data collection, and obtain verifiable parental consent before collecting the information from children. Violations of this law can result in penalties of more than $50,000 per violation. If a startup has any uncertainty about whether COPPA applies, it should consult with an attorney for guidance.
Health Insurance Portability and Accountability Act
The Health Insurance Portability and Accountability Act (HIPAA) applies to any business operating in the healthcare sector. This federal law imposes strict rules for protecting sensitive protected health information (PHI). HIPAA requires written procedures and policies and the implementation of administrative, physical, and technical safeguards to ensure PHI is secure.
Best Practices for Privacy Policy Implementation
As long as it complies with the applicable laws, a startup’s privacy policy does not have to follow any other specific requirements. However, to offer consumers peace of mind and ensure compliance is apparent, a company can use some best practices. These practices include:
- Privacy-By-Design: Integrate privacy considerations into product and process development from the outset rather than trying to shoehorn it in later. This will provide seamless experiences and ensure the company completely aligns with all applicable laws.
- Legal Review: Have an attorney review the privacy policy to ensure compliance with all applicable laws. They can also offer guidance regarding any weaknesses or missing information in the policy.
- Make It Clear: Many companies want to use legal terms in their privacy policies because the policy is a legal requirement. However, because ordinary people will be reading them, it is better to avoid legal jargon and use simple, understandable language that still gets the point across.
- Ensure It Is Accessible: Place the privacy policy in an easily accessible location, such as the website footer or sign-up page. Consumers should not have to hunt for the policy.
- Perform Regular Updates: Review and update the policy regularly. Companies should generally review and update annually or whenever their business practices change.
Keeping up with these maintenance tasks may help ensure that a privacy policy is always up to date and compliant.
How a Florida Business Formation Attorney May Benefit Your Startup
Growing startups need privacy policies just as much as decades-old businesses. Understanding what information is essential in these policies and how to comply with all applicable state, federal, and international laws can be crucial to avoiding significant financial penalties and statutory damages paid to each consumer affected by any violations. An experienced Florida business formation attorney at Clearwater Business Law may be able to assist with advising which laws your company must comply with and how to do so, as well as reviewing an existing policy to ensure it meets all legal requirements. We may also be able to help you if you have already incurred a violation. Call (727) 502-6874 to schedule an appointment and learn more about protecting your startup and consumers’ privacy.