What Ecommerce Entrepreneurs Need to Know About Data Privacy and Compliance

July 12, 2022
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As the race to build a better customer experience intensifies, companies across the world are being forced to navigate complex regulatory landscapes.

At the forefront of these regulations is data privacy – the European Union’s General Data Protection Regulation (GDPR) is forcing companies to adapt their practices.

But why does data privacy matter to eCommerce companies, and how can businesses achieve and maintain compliance?

The importance of compliance and data privacy for eCommerce businesses

All companies have to deal with data privacy regulations, but eCommerce companies in particular have a lot to think about.

For eCommerce businesses, compliance with such laws is essential for protecting customer information. Failure to do so can expose them to major financial penalties, brand damage, loss of customer trust, and lawsuits.

Ecommerce companies face more complex data privacy issues than companies in other industries, due to the nature of their business. They are more exposed to cyber-attacks and handle more types of customer information.

For example, eCommerce companies don’t just handle names and email addresses; they handle more sensitive information such as credit card information, phone numbers, and IP addresses.

In addition, eCommerce companies also deal with physical merchandise and have to carefully protect customer data and comply with regulations that apply to physical goods (such as those related to shipping restrictions, product recalls, and more).

How to ensure data protection and compliance

In order to comply with the data privacy laws, you must provide users with notice before collecting any personal information from them when they visit your e-commerce website (including via registration, purchase, or contact forms).

In addition, you must state both a location where their personal information is stored and how they can access, modify, or cancel their accounts in the future.

In order to protect the privacy of e-commerce website visitors, make sure all of these policies have been implemented.

Here are some best practices you should follow:

1. Check if the third-party providers you use are compliant

Data privacy laws not only apply to your business, but they also apply to your interactions with the third-party providers you use. 

You, as the controller of the collected personal information, are responsible for making sure that all the third-party providers that you work with comply with relevant data privacy laws. 

This means your third-party providers should provide you with documentation that proves they have implemented the necessary policies and processes. 

Make sure you ask for this documentation. 

2. Set your privacy and cookie policies

Cookies are little bits of data supplied by websites that are saved on a user’s computer to aid with future online surfing. Cookies, on the other hand, might be a security issue. This implies that your e-commerce website must have a cookies policy that informs users that cookies are used when they visit the site.

Data privacy laws require you to provide users with notice about your website’s privacy policy and cookie policies. 

Make sure your policies state the following:

  • An overview of the type of information that your website collects (including IP addresses):
  • How long do you retain users’ personal information
  • How users can contact you and request deletion of their personal information

3. Allow users to opt out 

Data privacy laws require you to provide users with an easy opt-out option any time you are collecting their personal information. This also means that you need to make it easy for users to withdraw their consent at any time. 

If you are collecting personal information via cookies, this means users should be able to easily opt out of accepting cookies.

4. Make a data retention strategy

The danger of a data breach can be lowered by limiting the amount of information collected and the length of time it is kept. Customers can access their accounts by providing only the absolute minimum of identifying information.

You may automate data preservation by using cloud-based archiving software, which automatically purges data based on a period you choose.

5. Put the right security in place 

Your e-commerce website must have the right security in place to protect users’ personal information. You must be able to demonstrate that you have put suitable security measures in place to secure your website. 

This means you need to regularly update your website and platform with the latest security patches, and monitor any suspicious behavior. 

As the owner of the website, you must also ensure that any third parties that you work with are putting the right security measures in place. 

6. Provide users with access to their personal information 

Data privacy laws require you to provide users with a copy of the personal information that your website holds. 

This means you should keep a log of all your user information, including the personal information you collect, how you are using it, and where you are storing it. 

Users should be able to access this information upon request.


Data privacy laws are complex, but with the right compliance practices in place, eCommerce companies can protect their customers’ personal information.  

It’s vital that eCommerce companies take the necessary steps to ensure compliance, or they could face major financial and reputational consequences.


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