What Is Data Privacy & Why Does It Matter?

With the rise of the Internet, protecting personal information is more important than ever. Numerous businesses and organizations have been involved in high-profile data breaches, resulting in the mishandling of users' personal information. As a result, many countries have enacted data privacy laws and regulations to protect individuals and hold companies accountable. In this article, learn exactly what data privacy is, why it's important, and what you can do to protect your own data.

What is data privacy?

Data privacy, sometimes called information privacy, is centered around how your personal information is collected and used as well as how it's stored and shared. It helps ensure your sensitive data - like your name, address, phone number, or Social Security number - is only accessible to authorized people.

Data privacy isn't a single approach. Instead, it's a branch of information security that involves rules, regulations, practices, and tools that organizations use to establish and maintain high levels of privacy compliance.

Some of the applicable data privacy laws include California Consumer Privacy Act (CCPA) and the General Data Protection Regulation (GDPR). Organizations that collect personal information must make sure that they have appropriate policies in place to protect this information. They must also get permission from individuals before collecting, using, or disclosing their personal information.

A man employs data privacy to protect his information

Without these laws, users and companies risk big losses like financial penalties, legal action, and brand damage.

What does data privacy involve?

As mentioned previously, data privacy involves a several different aspects. Elements of information privacy are:

  • Legal framework. This involves the laws and regulations put in place to protect peoples' personal data and make sure that organizations handle it properly. In the US, this includes acts like HIPAA, FERPA, and COPPA.
  • Policies. Information privacy includes the internal policies companies put in place to safeguard data.
  • Data governance. The processes, practices, and standards used for handling data are an important part of information privacy.
  • Practices. Though practices are a part of data governance, the specific actions and procedures put in place actually guide IT infrastructure. This includes measures like de-identification, encryption, and consent management.
  • Third-party association. Managing third parties that interact with the data, like cloud service providers, is an essential part of data privacy.

The goal for data privacy is to make sure that sensitive information stays secure, even when stored or shared.

Why is data privacy important?

Data privacy is important for several reasons. For individuals, it helps protect from various types of cybercrime. Personal information can be used by criminals to open bank accounts, apply for credit cards, and commit other types of financial fraud.

Data privacy is also important for protecting your reputation. The loss of your personal information can result in harassment or other dangers, potentially even doing damage to professional or personal relationships.

From a business perspective, information privacy also builds trust between organizations and their customers. By proving a commitment to protecting personal information, organizations can build stronger relationships with their customers.

What are the data privacy laws?

Data privacy laws are regulations that govern how personal information is collected, processed, and shared. These laws vary by country and region; however, they all aim to protect the privacy and security of individuals' personal information.

Over the years, the United States enacted several federal laws to cover different aspects of information privacy. The laws cover health data, financial data, and any sensitive data collected.

Some good examples include:

  • Health Insurance Portability and Accountability Act (HIPAA) regulates the privacy and security of personal health information.
  • Children's Online Privacy Protection Act (COPPA) requires websites and online services to obtain parental consent before collecting personal information from kids under the age of 13.
  • Gramm-Leach-Bliley Act (GLBA) focuses on how financial institutions should deal with the private information of an individual.
  • New York SHIELD Act enforces stricter data protection, showing the evolving landscape of information privacy regulations across the nation.
  • Electronic Communications Privacy Act (ECPA) safeguards the privacy of electronic communications and related data.
  • Fair Credit Reporting Act (FCRA) regulates the collection, distribution, and usage of consumer credit information.

In addition to federal laws, data privacy laws have also been enacted at state level in the US, such as with the California Consumer Privacy Act and the Colorado Privacy Act.

In Europe, the General Data Protection Regulation (GDPR) gives EU citizens much more robust data privacy rights. The law regulates how Europe stores and handles personal data.

Staying on top of your data privacy means being being proactive. No matter where you live, it's important to understand your rights.

What are the principles of data privacy?

The principles of data privacy are consent, transparency, and security.

Consent means that individuals have the right to control their personal data and therefore must give permission for organizations to collect, process, or share it.

Transparency means that individuals have the right to know what personal data is being collected, how it's being used, and also with whom it's shared.

Security means that personal data must be protected from unauthorized access, use, or disclosure.

Benefits of data privacy compliance

Data privacy compliance offers many benefits for individuals, businesses, and even society as a whole. Here are the primary benefits of a business complying with data privacy principles.

  • Enhanced consumer trust. Data privacy compliance shows a commitment to safeguarding individuals' sensitive information, which then creates trust between companies and their customers.
  • Better data usage. Adhering to data privacy regulations involves implementing robust security measures, leading to better-quality data. This also translates into more accurate results.
  • Positive brand image. Compliant organizations are viewed as ethical, which fosters a positive brand image.
  • Low storage costs. Effective data management reduces the risk of data errors, ultimately leading to fewer associated costs. Adhering to laws reduces costs for backup data storage as well.
  • Increased efficiency in operations. When data privacy procedures are placed into daily processes, it leads to higher quality data management practices overall. Clearly defined data policies help identify and fix issues early on.
  • Legal and regulatory protection. By staying up-to-date with evolving data protection requirements, organizations mitigate the risk of non-compliance-related penalties and legal actions.

Though data privacy compliance may seem tedious or unnecessary for some businesses, it's absolutely essential for both the consumer and the organization.

Best practices for protecting data privacy

For individuals

If you prioritize protecting your own data, you'll be in a much better position should you ever become victim to a data breach or other security incident. For individuals, data privacy can be enhanced by:

  • Using strong and unique passwords. Using the same password across sites puts you at a major risk. Make sure that each account has a unique, complex password that also includes a minimum of 12 characters.
  • Enabling 2FA. Two-factor authentication, or 2FA, adds an extra layer of security to your logins. It requires not only your password but also a security code sent to your phone or email.
  • Avoiding public WiFi networks. Public WiFi networks aren't always secure. Never conduct financial transactions or share private information on public WiFi. If you have to use a public network, use a VPN on your device.
  • Reviewing privacy policies. Many websites collect and share your personal data, so review the privacy policies of sites you use and adjust your settings to limit data collection. You can also turn off location services, ad tracking, and sharing options.
  • Staying alert for phishing emails. Phishing emails contain malicious links, which is one common way for scammers to steal data or install malware; therefore, don't click links from suspicious emails.
  • Using antivirus software. Install antivirus or anti-malware software to protect your devices and your data.

For businesses

In businesses, data privacy guidelines are equally more complex and more extensive. All companies and organizations should do their best to:

  • Implement strong security measures. Businesses should use robust encryption, firewalls, and access controls to safeguard data against unauthorized access.
  • Conduct risk assessments. Regularly assessing potential risks to information privacy helps identify weaknesses in your systems.
  • Train employees. Educating employees about information privacy best practices helps focus on the importance of secure data handling.
  • Regularly audit and monitor. Conduct regular internal audits to ensure data privacy practices align with policies.

What's the difference between data privacy and data security?

Data privacy and data security are related concepts, but they focus on different aspects of protecting information.

Data privacy involves the control an individual has over their personal data, including how it's collected, what it's used for, and who has access to it. Laws and regulations like the GDPR and CCPA emphasize information privacy by giving individuals legal rights over their personal information.

Data security, on the other hand, focuses on protecting data from unauthorized access, breaches, and cyber threats. It involves implementing technical, organizational, and procedural measures to prevent data from breaches or leaks.

Essentially, information privacy focuses on the proper handling of personal data in line with individuals' preferences and legal requirements. Data security focuses on safeguarding data from illegal access.

What are your data privacy rights?

Your personal data has value, and you have rights when it comes to how companies collect, use, and share that data. These are your data privacy rights and how to exercise them:

  • Know what data companies have about you. You have the right to request a report of the data a company collected about you, such as your name, address, browsing history, and purchase history.
  • Ask companies to delete your data. If a company has data about you that you believe they don't need, then you can request that they delete it.
  • Opt out of data collection and sharing. You have the right to opt out of targeted ads based on your personal data.

If you feel like you need to take your information privacy into your own hands, then make sure you know your rights and how you can take back control of your private information.

Frequently asked questions

What information is considered personal data?

Personal data includes details like your name, address, date of birth, fingerprints, credit card numbers, browser history, location, and more. Essentially, it includes any information that can identify you, either directly or indirectly.

How is my personal data collected?

When you sign up for websites, mobile apps, and social media platforms, they collect information such as your name, email address, location, and browsing habits.

What are the potential consequences of violating information privacy laws?

The potential consequences of violating these laws include fines, legal action, reputation damage, loss of customer trust, and even loss of business later on. In some severe cases, violating data privacy laws results in criminal charges.

How does blockchain support data privacy?

Most databases store data in one place or server. Blockchain, however, uses a decentralized structure to distribute data across different network nodes. This makes it harder for someone to access the data without the proper authorization.

Additionally, each block in the blockchain is encrypted and connected to the other blocks through cryptographic hashes. This makes the chain secure, protecting the user data contained inside.