Protecting Customers’ Privacy is Non-Negotiable for Businesses

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Protecting Customer Privacy Why have privacy issues risen to the top of issues that concern both businesses and their customers?
Why now?

In the digital age, access to everything is easier, and the price of living and transacting is that a lot of personal information is out there. Unfortunately, there are many others “out there” who seemingly are steps ahead in gaining access to personal information for their own fraudulent purposes.

But individuals also expect more in the way of protection—from the government, banks and yes, even the companies we do business with. And to customers expecting privacy, neither the size or sophistication level of the business is relevant. In their minds, if you take in sensitive, personal information like credit cards or account numbers, you also need to protect it. Period.

Security and privacy are often used interchangeably. But more accurately, security involves keeping your business’s information safe, while privacy refers to safeguarding customer information against misuse or theft. Security encompasses all the steps you take to reduce the threat of identity theft, guard against unauthorized customer contact and help prevent fraudulent or inappropriate uses of their information. Privacy is all about respecting your customers’ right to both privacy and anonymity, as well as your commitment to preserving their peace of mind.

It goes without saying that not fulfilling privacy and security obligations is costly, with consequences ranging from lawsuits to going out of business. On the other hand, experts say that demonstrating your commitment and procedures to your customers is likely to win their trust and their business. Start with a privacy policy. It doesn’t have to be fancy or complicated and, in fact, can be simple and straightforward. Here’s an example:

We are committed to protecting your privacy and will never share your information. Information we collect is stored under lock and key or by sophisticated digital means. Otherwise, it is destroyed immediately. Please contact us anytime if you have questions or concerns.


Don’t forget to have your attorney review the policy, as well as everything else related to your customers’ privacy.

If you don’t have formal, integrated privacy procedures in place or haven’t reviewed them recently, you’ll want to read Darrell Zahorsky’s article titled Is Your Small Business Privacy Friendly? at sbinformation.about.com. The author says that how carefully you handle your customers’ privacy—and how you communicate that care to them—is a key determinant in their decision to do business with you.  In other words, your approach to privacy is one of the most important business decisions you can make.

Experts say that customers generally fall into three categories in terms of privacy concerns. The majority (more than 60 percent) want clear privacy rules and disclosure from companies. Another quarter wants more privacy laws and opt-in choices. And a little over 10 percent are willing to exchange privacy for the benefits of purchasing access, ease and convenience.

Privacy is obviously now a non-negotiable for every small business—but one that demands special attention when you operate online. Two recommended resources: OECD Privacy Policy Statement Generator (www.oecd.org) and the Direct Marketing Association Privacy Policy Generator (http://thedma.org/). Since laws and guidelines vary by industry and geography, be sure to check with industry associations, as well as local and federal guidelines.

Entrepreneur.com offers a seven-step guide to protecting customer privacy. Technology writer Riva Richmond points out that you are legally, if not morally, obligated to do everything you can to protect your customers’ personal information. More and more small businesses are learning this the hard way through disputes, lawsuits and lost business.

But Richmond also says good privacy practices don’t have to drain your company coffers—and in fact, if done properly, can create goodwill and boost sales while reducing your business and legal risks. Richmond outlines seven distinct steps for building an integrated and effective privacy plan for your business:

  1. Conduct a data privacy audit. Articulate what your business actually needs and how it is to be used. Put someone in charge of the data who is ultimately responsible.
  2. Minimize data collection and retention. Experts say what you don’t have can’t hurt you!
  3. Secure the data you keep. Secure all personal information, not just credit card or account numbers.
  4. Post a privacy policy. Richmond suggests additional resources (some free, others for a fee), such as tools from PrivacyChoice (www.privacychoice.org) and TRUSTe (www.truste.com).
  5. Communicate with customers. Be direct and upfront about the data you collect and how you use it.
  6. Give your customers a choice. More customers expect settings and features that let them choose whether to share data. 
  7. Provide a forum for complaints. What you don’t want is unhappy customers posting on Facebook or Twitter about your privacy issues. Provide clear contact information—and absolutely, positively respond to every message, question or complaint you receive.

The bottom line for all businesses—the smallest included—is that the proverbial privacy horse is out of the barn, never to return. The good news is that there are lots of resources to help you tame it and even make it work for you. The SBA is always a good source of information and guidance. Check out the agency’s customer privacy recommendations here.

Image courtesy of David Castillo Dominici / FreeDigitalPhotos.net

 

How are you handling your customers’ personal information? Have you stepped up your privacy activities in recent years? How are you communicating with customers about their privacy?


BFS Capital is a direct funding source and a leading business financing solutions provider. Founded in 2002, BFS Capital provides working capital to owners of small and medium-size businesses in all 50 states. In addition to funding, BFS Capital strives to work with business owners by providing tips and resources to help their businesses succeed. At BFS Capital, we are proud to be an accredited BBB company with an A+ rating. Follow us on Google+, Facebook, and Twitter!