Protecting personal data is crucial for gaining and maintaining customer trust. In this article, we will discuss some of the challenges related to data privacy compliance in e-commerce and present best practices for addressing them.
WHAT IS DATA PRIVACY COMPLIANCE
Data compliance is an organization’s approach to adhering to legal and regulatory requirements. It can also cover compliance with any applicable industry standards such as personal data collection, storage, processing, and sharing.
Data security compliance is a similar term that refers to a set of standards and laws that organizations must follow to secure their data. Encrypting sensitive data (like customer addresses and payment information), controlling user access, and setting up dependable backup systems are all part of it.
WHY IS IT IMPORTANT IN E-COMMERCE?
Compliance with data security laws is usually mandatory, and failure to comply can result in severe penalties that can change the trajectory of an organization. In the event of a breach, regulatory bodies levy high fines in addition to any legal penalties you may face for improper data management. There’s also the risk of reputational damage when you aren’t compliant with data protection regulations. Per Deloitte, nearly 6 in 10 consumers worry that their devices are vulnerable to data security breaches. Another 86% of people of working age are already concerned about how much information businesses hold about them.
Personalization efforts suffer as a result of the fact that word of a data breach may make them even less willing to share their information. On the other hand, compliance tells customers that their data is being handled with care. This can build trust and loyalty, while also encouraging customers to hand over more data that you can use to personalize the shopping experience.
KEY DATA COMPLIANCE REGULATIONS
Ecommerce businesses are required to remain compliant with regulations that protect customer data. The Payment Card Industry Data Security Standard (PCI DSS), a global information security standard for businesses that deal with branded credit cards, is one illustration of this. Opt for a PCI DSS-compliant payment processor that tokenizes and encrypts cardholder data to prevent it from falling into the wrong hands.
Data compliance security measures must also be in place for any third-party software, such as marketing analytics tools or payment processors. The personal data you collect from your customers, as well as the data you give to vendors to process on your behalf, are under the control of your company.
INDUSTRY CONSIDERATIONS
Different industries have unique data compliance requirements. Even if you already meet the broader global standards, having an understanding of these regulations and standards is essential to ensuring that you continue to be compliant. The Gramm-Leach-Bliley Act (GLBA), which governs American financial institutions, is one illustration of this. In the United States, banks, investment firms, and insurance companies must clearly explain their data-sharing practices to all customers and implement stringent safeguards to safeguard customers’ data. Any financial data you’ve collected on customers is also subject to compliance rules. According to a Bluefin study, ransomware and extortion techniques like malware, phishing, and distributed denial-of-service (DDoS) attacks account for nearly two thirds of all data breaches. Ransomware is the biggest threat for 92% of industries. Some data compliance regulations are universal, which means that businesses all over the world follow them as a general rule. Others are regional in the sense that they apply to the users who live there as well as the location of your company. Examples of this include:
- The General Data Protection Regulation (GDPR): is a major law in the European Union (EU) that governs data protection and privacy. It applies to any company handling data of EU residents, even if the business itself is located outside the EU.
- The California Consumer Privacy Act (CCPA): improves privacy protections for residents of 13 states in the United States. In the coming years, six more states will follow suit. Users can exercise their right to opt out of data collection and request a copy of their personal information. ThePersonal Information Protection and Electronic
- Documents Act (PIPEDA): requires all businesses to get consent before collecting personal data from Canadian users.
In recent years, Colorado, Connecticut, Virginia, and Utah have all implemented similar consumer privacy and data protection acts. Activated bills are also being brought up to date in other states. The Senate Bill 332 of New Jersey was approved in 2024 and became law in January 2025.
CHALLENGES CONSENT
A fundamental principle of data privacy is obtaining effective consent from individuals. However, valid consent is frequently difficult to obtain in e-commerce due to customers’ reluctance to read extensive privacy policies or participate in intricate consent procedures. Misunderstandings and a loss of customers’ trust as a result of a lack of or unclear consent can damage a company’s reputation over time. Furthermore, insufficient consent may have legal consequences, such as fines or compensation claims.
DATA SECURITY
Another issue in e-commerce is the security of personal data. Businesses need to take precautions to keep the data they store safe and prevent it from being accessed by unauthorized third parties or hackers. Theft or manipulation of personal information can occur as a result of inadequate data security measures, costing the business customers’ trust and tarnishing its reputation. Additionally, data breaches may result in monetary penalties and legal action.
COMPLIANCE WITH DATA PROTECTION REGULATIONS
Complying with data protection regulations can be a challenge for e-commerce companies, especially when operating in multiple countries. Companies must adhere to the data protection laws of each country in order to avoid being subject to fines or other penalties. Non-compliance with these regulations can have serious consequences, including loss of customer trust and the risk of fines and other legal repercussions.
PRACTISES FOR ADDRESSING DATA PRIVACY CHALLENGES
TRANSPARENCY
One way to address challenges related to consent is by providing transparency. Companies should clearly and understandably formulate their privacy policies and ensure that customers understand how their data will be used. Using simple and clear language and providing concise summaries can help improve customers’ understanding.
DATA SECURITY
Transparency is one approach to addressing consent-related issues. Companies should clearly and understandably formulate their privacy policies and ensure that customers understand how their data will be used. Using simple and clear language and providing concise summaries can help improve customers’ understanding.
COMPLIANCE
To ensure compliance with data protection regulations, companies should seek guidance from professionals knowledgeable about the applicable laws. Companies should also ensure they have a clear strategy for compliance with data privacy regulations and regularly monitor the implementation of this strategy. Employees can better understand the significance of data privacy and adhere to the company’s privacy policies and procedures with the assistance of education and training.
E-commerce data privacy is a complicated issue, but it is essential to the success of e-commerce businesses. Companies can distinguish themselves from rivals and gain customer trust by implementing best practices to address data privacy issues. Companies should ensure they take the appropriate measures to protect their customers’ privacy and meet data protection regulations worldwide.