What is data privacy, and why is it important?

What is data privacy?

Data privacy is how you choose to protect your personal information and maintain control over how it’s collected, shared, and used online. While personally identifiable information (PII) — like your name, address, and financial details — is a primary focus, other types of data also need protecting.

Advertisers, tech companies, and data brokers often use behavioral data, such as your browsing history or shopping habits, to create targeted ads and detailed profiles. Similarly, healthcare providers, insurance companies, and fitness app developers can access your health and biometric data, such as medical records or smartwatch activity.

That’s why it’s important to know who is viewing our activities online and what they’re doing with that information. Allowing larger companies to track and store your data can have unexpected consequences, so you should have a say in the matter.

It’s easy to focus solely on the threats posed by hackers and malicious actors, but this represents only part of the issue. Protecting yourself requires attention to both data security — which prevents unauthorized access to your data — and data privacy — which gives you control over who can use your information.

Data privacy vs. data security

Data security involves protecting your data from unauthorized access or theft using tools like encryption and strong passwords. Data privacy, on the other hand, focuses on controlling how your personal information is collected, shared, and used. While security protects your data from breaches, data privacy gives you control over who can access it and how it is used.

Why is data privacy important?

Data privacy is important because it protects your personal information from misuse and gives you control over how it's shared and used. Without strong data privacy, your information could be exposed to risks, from identity theft to unwanted surveillance.

For individuals, privacy is crucial to ensure personal security and preserve freedom. Criminals might use stolen personal data to commit fraud, harass people, or steal identities. Companies might sell your data to advertisers or third parties without your consent, bombarding you with unwanted ads or promotions.

On a larger scale, failing to protect data privacy can also harm businesses. If a company mishandles customer data, it risks damaging its reputation, losing trust, and facing legal consequences like fines or sanctions. These factors collectively explain why data privacy is so important.

Data privacy laws

While you should take steps to protect your data, data protection laws actively work to protect you from unauthorized data access and misuse.

General Data Protection Regulation (GDPR)

The General Data Protection Regulation (GDPR) is an EU law that requires companies to collect personal data only when they have a lawful reason, such as your consent. It applies to any business, no matter where it is based, that processes the personal data of people in the European Union. Failing to comply with the GDPR can result in hefty fines — up to 4% of a company’s global revenue or €20 million, whichever is higher.

California Consumer Privacy Act (CCPA)

The California Consumer Privacy Act (CCPA), enacted in 2018, gives California residents greater control over their personal information. It lets them see what data companies collect, why it’s collected, and who it’s shared with. The CCPA also allows them to opt out of the sale of their personal data and ensures they won’t be penalized for exercising their rights.

Children's Online Privacy Protection Act (COPPA)

The Children’s Online Privacy Protection Act (COPPA) is a US federal law that protects the privacy of children under 13. It requires websites, apps, and online services aimed at kids to obtain verifiable parental consent before they collect, use, or share any of the child’s personal data. COPPA also mandates that these services provide a clear privacy policy explaining how they handle children’s information. Companies that don’t follow COPPA can face hefty fines — up to $43,280 for each violation.

Health Insurance Portability and Accountability Act (HIPAA)

The Health Insurance Portability and Accountability Act (HIPAA) is a US federal law that sets national standards for protecting sensitive patient health information. It applies to health plans, healthcare providers, healthcare clearinghouses, and their business associates. HIPAA’s Privacy Rule mandates the protection of protected health information (PHI), while its Security Rule requires physical, technical, and administrative measures to protect electronic PHI. Depending on the severity and intent, violating HIPAA can lead to civil penalties, criminal charges, or settlements.

Data privacy challenges

Both individuals and businesses face unique challenges when it comes to securing sensitive data. From protecting personal information to meeting privacy regulations, data privacy requires careful attention and proactive action.

Data privacy challenges for individuals

Data privacy challenges for individuals include:

• Online tracking. Many websites use cookies — small data files that track your online behavior. While cookies can make browsing smoother, they also raise privacy concerns. Websites often ask for permission to use cookies, but most people aren’t aware of how much information they collect.
• Lengthy and confusing privacy policies. Most people skip reading privacy policies because they are long, confusing, and difficult to understand. As a result, they often have no idea what they are agreeing to or how their data will be used.
• Social media risks. Social media platforms collect a lot of personal data — from what you post to your location and interactions with ads. Even if you adjust your privacy settings, platforms may still track your activity across the web, making it harder to maintain control over what personal information is shared and with whom.
• Phishing and scams. Phishing attacks trick you into giving away sensitive information like passwords or credit card numbers. They often take the form of fake emails, texts, or malicious websites that look legitimate, making it hard to tell what's real and what's not. 
• App permissions. Many mobile apps ask for more data than they really need. For example, some apps may request access to your location, camera, or contacts, even if they don’t require that information to work.
• Public Wi-Fi dangers. Public Wi-Fi networks, like those in cafes or airports, aren’t always secure. Hackers can easily intercept your data on these networks and gain access to sensitive information, such as passwords, credit card numbers, or personal messages.

Data privacy challenges for businesses

Data privacy challenges for businesses include:

• Transparency with users. Businesses often struggle to clearly explain how they collect and use personal data. When privacy policies are complicated or unclear, customers may hesitate to share their information, leading to mistrust and potential legal issues.
• Increasing attack surface. As businesses expand their online presence and adopt more internet-connected devices, their attack surface grows. A growing attack surface gives hackers more opportunities to exploit vulnerabilities. From websites and cloud services to IoT devices, every new connection creates a potential entry point for cybercriminals.
• Data breaches. Data breaches can occur when attackers gain unauthorized access to a company’s database or network. These breaches not only lead to severe privacy violations but can also harm a company’s reputation and erode customer trust.
• Third-party risks. Businesses often rely on third-party vendors to handle or process personal data. If these vendors don’t follow strict data protection standards, they may introduce additional security risks.
• Employee access and insider threats. Employees who have access to sensitive data may also pose a risk, whether intentionally or accidentally. Without proper access controls and monitoring, they may misuse or share confidential information without authorization.
• Compliance challenges. As data privacy laws evolve, businesses must stay up-to-date with the changes. Failing to comply can result in hefty fines and legal consequences, especially as authorities tighten enforcement.

How to protect your private data

Take proactive steps to protect your own or your organization’s private data from unauthorized access and potential breaches. Whether you’re an individual managing personal information or a business handling sensitive data, understanding the best practices for data security and privacy is key.

Data privacy tips for individuals

If you value your privacy, follow these tips:

1. 1.Keep your digital footprint in check. Be mindful of how much personal information you share online, especially on social media. Every post, like, or comment you make adds to your digital footprint, which can be tracked and used by advertisers and other companies or even hackers.
2. 2.Choose privacy-focused search engines. Most search engines track your queries and collect personal data. Consider using private search engines like DuckDuckGo or Startpage. These engines don’t track your searches or store your data, which means that they provide a more secure, anonymous way to browse the web without leaving a trail.
3. 3.Read privacy policies before agreeing. It’s easy to click “I agree” without thinking, but privacy policies explain how companies handle your data. Take a moment to skim through them, especially when signing up for new apps or websites.
4. 4.Manage cookies and tracking features. Websites use cookies to track your browsing habits. To reduce tracking, adjust your cookie settings to enable or disable cookies or clear them regularly. You can also activate the “Do not track” feature to ask websites not to collect your data.
5. 5.Disable location tracking. Disable location tracking when it's not necessary. For instance, avoid sharing your location on social media or in apps unless it’s necessary for the service or app to function properly.
6. 6.Review app permissions regularly. Social media apps like Facebook often ask for more information than they need. Review what data each app can access and turn off unnecessary app permissions. Be aware of how much Facebook knows about you and limit its access to sensitive information.
7. 7.Use a VPN for added privacy. A virtual private network (VPN) changes your IP address and encrypts your internet traffic, making it much harder for anyone — whether hackers, internet service providers (ISPs), or websites — to track your online activity. By connecting to a VPN, you can protect your privacy and browse more securely, even on public Wi-Fi.
8. 8.Opt out of data broker sites. Data brokers gather and sell your personal information, often without your consent. To protect your privacy, remove your data from data broker sites like Spokeo. Many data broker sites offer opt-out options that let you request the deletion of your personal information.

Data privacy tips for businesses

If you’re an enterprise owner or stakeholder, follow these data privacy tips for businesses:

1. 1.Execute strict access controls. Limit personal data access to only those who need it. Use role-based access controls (RBAC) to ensure employees and contractors only access the data necessary for their tasks.
2. 2.Practice data minimization. Collect only the essential information you need for your business operations. Avoid gathering excessive or unnecessary data that could increase the risk of privacy violations. The less personal data you store, the lower the risk of it being compromised in a data breach.
3. 3.Consider anonymization where possible. Anonymizing data can help reduce the impact of a potential breach. If you don’t need to store personally identifiable information (PII), anonymize it to make it untraceable to individuals.
4. 4.Be transparent with your data collection practices. Create a clear, user-friendly privacy policy that explains how you collect, store, and use personal data. Make it easy for your customers and clients to understand your data collection practices and provide a way for them to contact you with privacy-related concerns or questions.
5. 5.Conduct regular privacy audits to ensure your data practices align with your privacy policy and regulatory requirements. Audits help identify gaps or vulnerabilities in your data protection and ensure compliance with laws like the GDPR or CCPA. They also provide an opportunity to update security protocols and refine data-handling practices as your business grows.