Launching an online business requires you to be fully aware of e-commerce laws. Of course, you can’t know every single e-commerce law, but you need to remain compliant with data privacy laws.
Data privacy laws are changing every year, becoming more strict on how customers’ data is used and giving them more autonomy to modify, manage, and delete their personal data across all websites.
In this article, you’ll learn more about the steps you should take to make sure that your e-commerce business remains compliant with all data privacy laws.
5 Steps to follow to remain compliant with data privacy laws
Depending on where you do business, different data privacy laws apply to your e-commerce business.
See which data privacy law applies to your business
Even though you are an online business, you will still ship products to a particular location. Based on the location you are doing business in, that’s the data privacy laws you’ll need to follow.
For example, if you’re doing business in the US, you’ll need to comply with U.S. data privacy laws. There’s no single U.S. data privacy law. However, the American Data Privacy Protection Act (ADPPA) has made it a little further than the rest of the other privacy laws. There are many different data privacy laws across the U.S. that might be popular for e-commerce businesses. One, for instance, is the California Privacy Rights Act (CPRA).
California Privacy Rights Act (CPRA)
A popular data privacy act is The CPRA. It was passed in November 2020 and has been amended by the Californian state. Only this year, on January 1st, it went into effect.
The CPRA seeks to protect all California residents in the data privacy sector. It checks how and when personal data is collected, giving users the option to opt out of data collection and correct or delete it based on what they want.
The CPRA allows customers to do the following:
- The ability to correct personal information
- Restricting personal information usage
- Only give out sensitive information to authorized users
The CPRA will fine all users that don’t comply with the rules and each year, the fines are only becoming larger.
As for your e-commerce business, if you do business within Californian boundaries, this will require you to comply with the CPRA.
The General Data Protection Regulation (GDPR)
The GDPR is the strongest data privacy law in the world. It only applies within EU boundaries, but was the first to make data privacy laws popular. The GDPR was updated and modernized in 2018.
Similar to the CPRA, it focuses on giving autonomy to customers so they can modify and process private data. The GDPR’s goal is to give more control to individuals over their personal data. This includes the same principles as we mentioned with the CPRA.
When running an e-commerce store, the GDPR will apply to you if you do business within EU boundaries, meaning in states that are part of the European Union. You don’t need to live in the EU for the GDPR to apply to you. Online businesses have expanded our opportunities for doing business so that the GDPR can apply to anyone.
Payment card industry (PCI) compliance
The PCI compliance rate concerns how your online business handles credit and debit card transactions. The PCI ensures that all payments made online, involving a debit or credit card, are done with consumer security considered a priority.
You can’t be PCI compliant only by securing transactions, but by protecting the consumer’s data all the time. Compliance laws are changing over time, so it’s important to stay updated or even hire someone who can do so for you.
The standards of remaining PCI compliant are changing over time, just like they are with data privacy laws. Technology is a main factor in why the PCI standards are changing, but we’ll need to see what it’ll bring.
Earlier last year, PCI DSS 4.0 was released with 12 compliance requirements. Most of them were about information security and threat assessment.
Implement data security measures
If you want to remain compliant, you need to make sure that you have set up the proper data security measures. E-commerce security ensures that online transactions are safely conducted. They are part of the process of remaining compliant with data privacy laws.
Regarding data privacy, e-commerce security should involve restricting unauthorized user access. Giving out customer information to anyone is a crime in itself. The security measures you can take are to either install anti-virus software, use data encryption methods and implement other data protective measures that you can.
Also called “multi-factor authentication,” it is a process that requires someone to complete at least two verifications before they can get access to an account or other important information. It’s more effective than single-factor authentication.
Customers should always be required to verify their ID before processing online transactions. This is best for ensuring they aren’t using fake IDs and trying to impersonate someone else.
Refers to the accuracy of a company’s customer data. The higher the accuracy is, the more successful an e-commerce business will run and have fewer issues with data privacy laws. After all, using incorrect customer data will only cause customers to lose their trust in your services and this isn’t something you want to happen.
Cookie consent includes the permission given by visitors to use their personal information on a site. Users have the option to either accept or reject cookie usage. This way, you can establish a good relationship with users and respect their privacy.
There are many reasons why cookie consent is important:
- Builds trust: Users understand that you’re not misusing their information and respect their privacy. This way, you build trust from the beginning and strengthen it over time.
- Compliance: You need to see which data privacy laws apply to your website. Complying with these regulations helps you avoid fines.
- User control: Cookie consent allows users to make the right decisions regarding their personal data and website browsing experience.
- Data protection: With the right cookie consent mechanisms and protective measures, websites can effectively protect user’s data.
Overall, your compliance will depend on your geographical location and your target audience. Let’s not forget that when you implement cookie consent, you have different options on how you can display them.
- Pop-ups: Pop-ups will display a pop-up notification or banner that shows the user how their private information is used and asks for their permission.
- Implied consent: When users continue their website usage, it shows that they consent to cookie usage.
- Cookie walls: Requires users to consent to cookie usage for accessing more features on the website. However, many websites have been criticized for this since it seems as if they’re forcing users to accept cookie consent.
- Optional consent: Allows users to choose the types of cookies they want to accept. Their preferences can be customized based on their purposes and cookie categories.
- Implicit consent: These types of sites assume that the user already gave permission, but has the chance to opt out or modify cookie preferences.
Cookie consent is best when it gives users more autonomy. Many cookie consent options that force users to accept them for using a site’s features isn’t a very practical option.
Sales taxes and shipping regulations
Shipping becomes complicated when it’s done internationally. Whenever shipping internationally, you need to always check which products are restricted in the area you are shipping. You don’t want to go against local laws and the provider itself.
Moreover, we have the sales tax, which differs in each country across the world. If you refuse to pay sales taxes, you might have to face financial penalties. When selling internationally, you have taxes and tariffs which are sometimes complex to manage.
Some e-commerce stores will use third parties to manage these shipping costs. It’s because it saves them time and the fact that it makes the process easier to manage.
It’s important for you to remain compliant at all times
Remaining compliant with data privacy laws is important if you want to save yourself from paying fines. Data privacy laws are becoming more strict year by year, so it’s important to either follow them closely for updates, or even hire someone to do it for you.
Remaining compliant is promising the customer that you will protect their information no matter what and offering them full control of their data, whether it’s to modify or delete it.