Identity theft has become a huge problem for any company that conduct business via the internet.

In 2010, the U.S. Federal Trade Commission received 250,854 complaints about identity theft. The three states leading the way with the three highest per capita rates of reported identity theft were Florida, Arizona, and California.

Just as every consumer should take precautions to protect their personal information from theft, every company with an internet presence should take reasonable precautions to prevent identity theft. One of the best internet business practices to prevent identity theft is to establish a website privacy policy.

A privacy policy discloses how a company gathers, uses, discloses, and manages a customer’s data – ranging from the customer’s email address to their credit card number.

The United States has not yet enacted a specific federal regulation addressing privacy policies. But several states have taken legislative action, most notably California. The California Online Privacy Protection Act of 2003 (Business and Professions Code sections 22575-22579) requires “any commercial web sites or online services that collect personal information on California residents through a web site to conspicuously post a privacy policy on the site.”

From a practical standpoint, failure to establish a website privacy policy places your company at risk – especially if your website collects its visitors’ personal and financial information (such as credit card data).

It’s crucial that your company’s website prove that your company takes identity theft seriously by providing visitors with notification of how their private information will be used and who will have access to their sensitive information. A company website that does not provide an appropriate privacy policy notification immediately raises a red flag in the eyes of a website visitor – not the ideal way to start a conversation with a potential customer or client.

A website privacy policy can be very simple and provides tremendous clarity to your visitors who want to know that you’ve made an affirmative commitment to safeguarding their information, not selling it to third parties, or otherwise sharing it with shady individuals.

But two caveats apply. First, a privacy policy that is lengthy, overly technical, and hard to understand will inevitably be read infrequently and may alienate some customers.

Second, be aware that some U.S. states have enacted laws addressing the contents of website privacy policies. For example, Pennsylvania has specifically included in its deceptive or fraudulent business practices statute a prohibition against a person, in the course of business, knowingly making a false or misleading statement in a website privacy policy.

A website privacy policy should:

1. Provide website visitors with transparency about how personal information will be collected.

2. Explain how your company will use personal information.

3. Ensure that your company’s privacy policy is consistent with its actual practices in handling a customer’s personal information.

4. Include an effective date in your privacy policy statement.

Bottom line, creating a website privacy policy will help your customer make an informed decision about doing business with your company, provide reasonable identity protections for your customers, build trust, and reduce your exposure to potential lawsuits.

This article is an excerpt from “12 Website Legal Issues for Small Businesses and Entrepreneurs.”

Fred Reilly is an attorney licensed to practice in California, Florida, and as an English Solicitor.

To download your free copy of \”12 Website Legal Issues for Small Businesses and Entrepreneurs\” click Free Website Legal Issues eBook

Fred Reilly is an attorney licensed to practice in California, Florida, and as an English Solicitor.
To download your free copy of \”12 Website Legal Issues for Small Businesses and Entrepreneurs\” visit http://www.attorney-solicitor.com

Author Bio: Fred Reilly is an attorney licensed to practice in California, Florida, and as an English Solicitor.

To download your free copy of \”12 Website Legal Issues for Small Businesses and Entrepreneurs\” click Free Website Legal Issues eBook

Category: Business
Keywords: internet business best practices, website privacy policy