With more consumers and organizations becoming concerned about privacy issues on the internet, a company’s privacy policy creates transparency for customers and demonstrates compliance concerning the management of confidential data. In effect, a privacy policy is your company’s official statement on how it gathers, records and distributes information. If you’re collecting data, such as a customer’s date of birth, home address, social security number and/or credit card number, you’ll need to develop and publish a privacy policy.

Why a Privacy Policy Is Important

Crafting a strong privacy policy builds trust with your customers, who likely want to know what you’re doing with their personal information. Disclosing your privacy policy in a visible place on your company website, as well as ensuring that business partners and employees communicate it to customers, will reassure customers that you adhere to and uphold your privacy practices. However, your privacy policy should also be comprehensive enough so that it covers both online and offline uses of personal information.

Start by referencing the U.S. Federal Trade Commission’s Fair Information Practice Principles of privacy protection. These guidelines present standard concepts about fair-information practices for companies that conduct business on the web.

Developing a Corporate Privacy Policy

Drafting a privacy policy will not only ease customer concerns, but it’ll help maintain your reputation as a responsible and trusted company. Like any standard business document or policy, privacy policies differ from organization to organization. Though your privacy policy should be tailored to fit your business’ needs and industry, there are certain points that every policy should cover.

Identify Who (or What) Is Collecting the Data

Be clear about what entity will gather, store and release customer information. If you operate under the umbrella of a parent company, which entity ultimately gathers and houses the data? If it’s the parent company, then clearly state this in your policy rather than hiding it deep inside the text where it will be overlooked.

Explain How the Data Will Be Used

This is a big part of your privacy policy and, by far, one of the most important. Your privacy policy should succinctly state what web visitors or store patrons can expect from purchasing your products and services. There should be a section on your use of cookies – the mechanisms that package and save user information entered into web pages – for customers who shop on your site.

Additionally, share how potential and existing customer information will be used. If this information will only be used to facilitate their transaction, then state that in the policy.

Inform Users of Their Rights

If you plan to share your customer’s data with any parties outside of the company, you should inform them in the privacy policy and give customers the option to easily opt out of having their information released or sold to third parties. Provide the same option for customers who may want to opt out from receiving future marketing emails from your company.

In your business communications, make sure customers can easily subscribe to and unsubscribe from weekly newsletters, special offers, promotions and other company updates. Recipients should be able to easily sign up for your communications and easily unsubscribe should they choose to do so at a later time. Companies that fail to remove customers and other subscribers who’ve chosen to opt out of their mailing lists risk being labeled as spam or, worse, blacklisted by Internet Service Providers (ISPs). Being blacklisted adversely affects your deliverability and makes it difficult to reach even your most loyal customers.

Describe the Nature of the Data

It’s important that you’re also open about what type of information you’re collecting. In addition to basic contact information, will you collect and store information gathered from marketing surveys or other “Contact Us” forms? Will you track customer activity on the site? Will you store credit card information? Do you manage a corporate blog or social networking site that accepts and aggregates information on user comments? Assess all of the different forms of customer feedback, financial processes, customer segmentation tactics and social media activities your business engages in so that each topic is addressed in your privacy policy and employee handbook.

Affirm Your Commitment to Protecting Customer Data

Once you’ve evaluated your customer-facing business activities and developed a privacy policy that covers a wide range of possible privacy implications, display it prominently on your website. While updates in internet technology and government regulations will mandate occasional revisions, avoid making frequent and drastic changes to your policy.

Getting the principles and language right the first time will provide prospects and customers with a sense of confidence and security when using your website and business services. The policy should also state the date your website was last updated.

Consider a “Seal of Approval” for Your Policy

You can boost your online reputation by validating your privacy and security practices with commercial privacy service companies like TRUSTe. These providers can help you create a policy or review an existing one to make sure your policy’s information is current and accurate.

Though there are fees associated with using a privacy service company, they can provide a seal of approval that gives further credibility to your company and its privacy practices. The company will also perform periodic audits of your privacy policy to maintain quality standards. Seeing this seal of approval can help a customer feel at ease before submitting credit card information or giving you their primary email.