What is data privacy? Examples, relevant regulations, and best practices

Customers want to know that their personal information is in safe hands, and businesses that respect privacy earn trust, loyalty, and a competitive edge. That’s why data privacy has moved beyond just a legal requirement to a fundamental expectation.

Protecting data is more than just securing it from hackers. Consider: are you collecting only what’s necessary? Are you using it transparently? Are you giving users real control over their information? The answers to these questions and others separate companies that simply meet compliance requirements from those that truly prioritize privacy.

Let’s break down what data privacy really means, why it matters, and how businesses can get it right.

What is data privacy?

Data privacy, also called information privacy, refers to the right of individuals to control how their personal information is collected, used, and shared. It encompasses the practices, policies, and technologies that contribute to personal data being handled appropriately and in compliance with applicable regulations, frameworks, and policies.

Personal information includes any information that relates to an identified or identifiable individual. This can range from obvious identifiers like names and email addresses to less obvious data points such as device IDs, IP addresses, and browsing behaviors. 

In addition to single identifying data points like names, it can also include several pieces of data that may not be identifying individually, but could be when combined.

Data privacy vs. data security 

Some companies are mistaken in believing that protecting sensitive data from hackers or other security threats automatically makes them compliant with privacy regulations. While data security and data privacy are closely related — and often used interchangeably — they are not the same.

• Data security focuses on safeguarding data from unauthorized access and cyber threats. It involves technical protections like encryption, access controls, and monitoring systems.
• Data privacy governs how data is collected, shared, and used. It requires that personal information be handled lawfully and transparently.

Put simply, data security asks, “Is the data protected?” while data privacy asks, “Should we have this data, and are we using it appropriately?”

For example, your company might have strong security measures in place — encrypted data, restricted access, and continuous monitoring. But if you collected personal information without first obtaining proper consent, or you’re using it in ways that weren’t disclosed, you could still be violating privacy regulations.

Why is data privacy important?

Typically, data privacy is associated with laws such as the European Union’s General Data Protection Regulation (GDPR). However, data privacy matters for several reasons that extend beyond regulatory compliance.

First, trust forms the foundation of customer relationships. Transparent data practices demonstrate respect for customers and build long-term loyalty. Research from Cisco shows that 94 percent of organizations say their customers would not buy from them if they did not protect data properly.

In addition, privacy-conscious companies stand out in crowded markets. According to a 2024 PwC survey, 83 percent of respondents considered data protection a top priority that influences their trust in brands. Prioritizing cybersecurity and data privacy is clearly a genuine competitive edge.

Robust privacy practices minimize risks of costly data breaches and other violations, and potential resulting regulatory penalties. The average cost of a data breach reached USD 4.45 million in 2023, according to IBM’s “Cost of a Data Breach Report”. By prioritizing privacy, organizations protect both their finances and reputation.

Organizations also have an ethical obligation to respect individuals’ privacy rights. Handling personal information responsibly reflects positive company values and builds authentic connections with customers. This becomes more important as people increasingly care about ethical business practices and vote with their wallets.

Finally, with varying privacy laws, frameworks, and policies across different industries, regions, and countries, a strong privacy foundation enables smoother international operations. 

Companies that prioritize their customer’s data protection and privacy from the start adapt more quickly to new and evolving regulations and enter new markets with confidence.

This is just the tip of the iceberg when it comes to data privacy statistics. Discover 150 data privacy statistics that businesses need to know about in 2025.

Data privacy examples in business operations

Data privacy affects nearly every part of a business. Here are some ways in which it impacts different teams in their daily operations.

• Marketing teams need to obtain valid consent before sending promotional emails, tracking people’s online behavior for targeted ads, and other activities. That means providing relevant information about data processing, using clear opt-in options, and giving customers real choices about how their data is used.
• Customer service reps have to verify a customer’s identity before discussing account details. They should only access the minimum amount of personal information needed to solve the issue and no more, e.g. fixing a technical problem doesn’t require accessing payment information or full account details.
• Product developers benefit from thinking about privacy early in the design process rather than tacking it on later. This privacy by design approach saves time, avoids compliance headaches, minimizes technical debt and retrofitting, and builds trust with users.
• HR teams handle sensitive employee data daily, from health records to payroll to personal files. Keeping that information secure and limiting access to only those who truly need it helps prevent breaches and maintains employee trust.
• Working with third parties is very common, but comes with privacy risks. Companies need to vet their vendors, verify that they follow strict privacy standards, and have clear agreements in place to prevent unauthorized access or data sharing and data selling.

When your company takes privacy seriously across all departments, you’re not just following the rules, you’re building a reputation for trust and responsibility.

Data privacy principles

At the heart of every privacy regulation lies fundamental principles that guide how organizations should handle personal data. These principles are the foundation of ethical data practices that build trust with your customers.

There are a few user data privacy principles companies need to follow, no matter their location or industry. 

• Transparency: Be clear about what data you collect and for what purpose(s). Avoid fine print, legal jargon, and hidden agendas. Your customers deserve to know exactly how their information is being used and who may have access to it.
• Purpose limitation: Only collect data for specific, legitimate purposes that you’ve clearly communicated to your users. Stick to those purposes — don’t suddenly decide to use their email addresses for something they never agreed to.
• Data minimization: If you don’t need it, don’t collect it. Gathering excessive data not only increases your compliance burden but also amplifies potential risks.
• Accuracy: Keep personal data up to date and provide easy ways for users to correct inaccurate information. Outdated or incorrect data benefits no one.
• Storage limitation: Don’t hold onto data forever. Implement retention policies to delete personal information when it’s no longer needed for the original purpose and/or no longer required to be retained to meet other regulatory requirements.
• Integrity and confidentiality: Protect personal data against unauthorized access, damage, theft, or loss via appropriate security measures. Remember, real privacy relies on real security.
• Accountability: Take responsibility for how you handle personal data and be able to demonstrate regulatory compliance. This means proper documentation, regular audits, and a culture that values privacy.

These principles can serve as a roadmap for building respectful, sustainable relationships with your users in a digital world where trust is increasingly rare and increasingly valuable.

Data privacy certifications for a compliant business

Professional data privacy certifications help organizations validate their commitment to protecting personal information. These credentials provide a structured approach to demonstrating privacy best practices and building trust with customers and stakeholders.

Some key data privacy certifications include:

• ISO/IEC 27701: An international standard for privacy information management, extending existing information security frameworks.
• IAPP Certified Information Privacy Professional (CIPP): A professional certification showcasing expertise in privacy laws across different jurisdictions.
• SOC 2 Type II Privacy Criteria: A report evaluating an organization’s privacy controls and data-handling practices.

If you want to dive deeper into how professional certifications can strengthen your organization’s privacy practices and build customer trust, we’ve put together a blog that covers the top data privacy certifications.

Common data privacy issues 

Even well-intentioned companies can stumble when it comes to protecting user privacy. Understanding the most common pitfalls helps you avoid them, and the damage they can cause to customer trust and your bottom line.

There are eight common data privacy issues companies face.

• Unclear data collection practices
• Ineffective or nonexistent consent management
• Excessive data retention
• Insufficient request response and data management
• Cross-border data transfer complexities
• Inadequate privacy and user rights documentation
• Lax vendor management
• Data collection and privacy issues

Fortunately, these common issues have solutions. With thoughtful policies, proper training, dedication to maintenance, and the right privacy tools, you can build privacy protection into the fabric of your business operations.

Global data privacy laws

While data privacy laws vary by country, most are built on the same core principles, many of which stem from the Fair Information Practices (FIPs). These frameworks guide how organizations collect, use, and protect personal data, with an emphasis on transparency, accountability, and user rights. 

Despite regional differences, the goal remains the same: to safeguard personal information and give individuals more control over how it’s used.

However, companies are required to determine which data privacy laws apply to their users. Many data privacy laws are extraterritorial, so apply to residents of a country or region and their data, and even if a company is located elsewhere, if it processes’ those residents’ data, the laws apply to their operations.

Companies need to understand where their data originated from, what personally identifiable information (PII) is being processed, and how the data is used, stored, and shared, including potential cross-border data transfers.

Let’s take a closer look at how some of the most significant data privacy regulations impact both users and businesses.

EU General Data Protection Regulation (GDPR)

The GDPR, introduced in 2018, is one of the most influential data privacy laws worldwide. It applies to any organization that processes the data of EU residents, even if the company is based elsewhere.

Key provisions include:

• Strict consent requirements: Companies must obtain clear, informed, and freely given consent before collecting personal data, and users have the right to withdraw consent at any time.
• Comprehensive individual rights: Users have the right to access their data, request corrections, demand deletion (known as the “right to be forgotten”), and object to certain types of processing.
• Accountability and transparency: Organizations must document how they process data, conduct regular risk assessments, and appoint a Data Protection Officer (DPO) if they handle large volumes and/or sensitive information.

Brazil’s General Data Protection Law (LGPD)

Brazil’s Lei Geral de Proteção de Dados (LGPD) or General Data Protection Law, which came into full effect in 2021, closely mirrors the GDPR while incorporating elements unique to Brazil. It applies to businesses that process the personal data of Brazilian residents, regardless of the business’s location.

Key provisions include:

• Broader legal bases for processing: It defines ten valid reasons (the GDPR has six) for processing personal data, including consent, legitimate interest, and contractual necessity.
• Data subject rights: Individuals can access their data, request corrections, revoke consent, and demand deletion under specific conditions.
• Mandatory data breach notifications: Organizations must report data breaches “within a reasonable time,” though no strict timeline is set.

Japan’s Act on Protection of Personal Information (APPI)

Japan’s Act on the Protection of Personal Information (APPI) was significantly amended in 2020. The amendment strengthened rules for cross-border data transfers and enhanced individual rights. This act applies to businesses that collect or process Japanese citizens’ personal data, and includes foreign companies.

Key provisions include:

• Transparency and consent: Organizations must clearly disclose how they collect, use, and share personal data, and obtain consent for processing certain sensitive information.
• Stricter international data transfers: Companies transferring data outside of Japan must implement equivalent privacy protections and inform users of potential risks.
• Right to request data deletion: Individuals can now request the deletion of their personal data in cases of misuse or prolonged retention without a valid purpose.
• EU adequacy decision: Japan’s data protection standards are recognized as equivalent to those of the GDPR, which allows for simplified data transfers between the EU and Japan.

Australia’s Privacy Act

Australia’s Privacy Act, first enacted in 1988, defines the Australian Privacy Principles (APPs), which govern how businesses and government agencies handle personal information. The Act is currently undergoing major reforms to align more closely with international privacy standards.

Key provisions include:

• Proposed expansion of individual rights: The reform aims to introduce stronger data access, correction, and deletion rights similar to the GDPR.
• Higher penalties for breaches: Updates may significantly increase fines for privacy violations, bringing them closer to GDPR-level enforcement.
• Stronger regulation of targeted advertising: Proposed changes would require clearer consent mechanisms for online tracking and personalized ads.
• Focus on small businesses: Currently, businesses with annual revenue under AUD 3 million are largely exempt, but upcoming reforms may change that.

Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA)

Canada’s Personal Information Protection and Electronic Documents Act (PIPEDA) is the country’s main privacy law that governs how businesses handle personal data. However, the law is dated, and efforts continue to be made on updated legislation. Additionally, the province of Québec has Law 25, a data privacy law more in line with European privacy standards.

Key provisions of PIPEDA include:

• Focus on consent: Businesses must obtain meaningful consent before collecting, using, or sharing personal data, except in specific cases like legal investigations.
• Individual rights and data access: Users can request access and corrections to their data.
• Ten Principles: In addition to consent, there are other core principles around which the law is based, including accountability, accuracy, and safeguards.

US data privacy laws

Unlike many other countries with comprehensive, nationwide data privacy laws, to date the United States follows a sector-specific (e.g. finance or healthcare) and state-by-state approach to protecting their citizen’s data and privacy.

Instead of a single federal regulation governing all personal data, various laws apply depending on the industry, type of data, or geographic location of the individuals involved.

Here are some of the key US privacy laws that businesses must be familiar with:

• Health Insurance Portability and Accountability Act (HIPAA): Regulates healthcare data. It requires strict safeguards for protected health information (PHI) and breach notifications for unauthorized disclosures.
• Gramm-Leach-Bliley Act (GLBA): Governs financial institutions. It mandates transparency in data collection, security measures, and protections against fraudulent data access.
• Children’s Online Privacy Protection Act (COPPA): Protects children under the age of 13 by requiring verifiable parental consent before collecting, using, or sharing their personal data.
• California Consumer Privacy Act (CCPA) / California Privacy Rights Act (CPRA): The CCPA data privacy grants California residents rights to access, delete, and opt out of data sales, with stricter rules for sensitive data under CPRA, which amended and largely replaced the CCPA.

While California has led the way in state-level privacy regulations, it’s not alone. Quite a few other states have introduced their own privacy laws, adding to the complexity of compliance for businesses operating nationwide. 

Additional legislation — for new state laws or updates to existing ones — continues to be introduced as well.

The cost of neglecting data privacy

Failing to prioritize data privacy can lead to major financial, reputational, and operational setbacks. Regulatory fines are on the rise, with EUR 1.2 billion in GDPR penalties issued in 2024 alone.

Beyond fines, reputational damage can be even more costly. 85 percent of consumers surveyed said they deleted an app in the preceding year due to privacy concerns.

Privacy breaches also disrupt operations, forcing teams to shift focus to damage control, often for months at a time, and submit to mandated reporting and audits, which can be resource-intensive. 

Legal risks add further strain, with potential class-action lawsuits and rising compliance costs. Weak privacy practices can also prevent business opportunities, limiting partnerships, advertising deals, investments, and market access.

Investing in privacy upfront is far less costly than dealing with the fallout from poor practices. Strong privacy practices protect your business, build trust, and open doors for growth.

Data privacy best practices for companies 

Moving from privacy theory to practice doesn’t have to be complicated. Here are three foundational strategies that can transform your approach to data privacy.

1. Embrace privacy by design

Privacy should be a core component of your business, not an afterthought.

By assessing privacy risks before launching any new initiatives, you can address potential issues early rather than scrambling to fix them later. 

This can include setting default settings to privacy-friendly options and limiting data collection to only what’s necessary. In addition, integrating privacy controls directly into user interfaces makes it easier for people to manage their data, which reinforces trust and compliance at the same time.

A proactive approach not only reduces regulatory risk but also enhances customer confidence in your brand.

2. Create a culture of privacy awareness

Privacy isn’t just the responsibility of IT or legal teams. It should be ingrained in your company culture. When employees understand how privacy impacts their roles, they become active participants in protecting user data. 

Conduct regular training, privacy-focused onboarding, and open discussions to help turn privacy from a box to check to a shared responsibility and opportunity. Recognizing privacy champions within different departments encourages a mindset where data protection is second nature.

When privacy awareness becomes part of everyday operations, compliance follows, and customers benefit from a more secure and thoughtful experience.

3. Be transparent and give users control

Consumers today expect clarity on how their data is used and the ability to easily manage their privacy preferences. 

So instead of overwhelming users with complex legal jargon, privacy policies should be clear and accessible. Transparency also means making privacy settings easy to find and enabling users to update, correct, or delete their data without hassle.

By clearly explaining the value users receive in exchange for sharing their information, businesses can foster stronger relationships built on trust. When people feel they have control over their data, they’re more likely to engage with a company and remain loyal in the long run.

Data Privacy Impact Assessments (DPIAs)

A Data Privacy Impact Assessment (DPIA) is another important personal data privacy tool that companies can rely on. It helps organizations identify and minimize risks before they become major issues. 

They are particularly important when rolling out new technologies, products, or processes that involve personal data.

A DPIA encourages businesses to ask important questions: What data are we collecting? Do we really need this data? What risks does data collection pose, and how can we reduce them? 

This structured approach means that privacy is considered proactively rather than as an afterthought. By documenting data collection, assessing necessity, evaluating risks from the individual’s perspective, and implementing safeguards, companies strengthen their overall privacy position.

While the GDPR and other privacy laws require DPIAs for high-risk processing, they’re beneficial for any organization looking to stay ahead of compliance requirements and maintain customer trust. 

A well-executed DPIA not only helps mitigate legal and regulatory risks but also reinforces a company’s commitment to responsible data handling, which is a key pillar of modern data privacy strategies.

Data privacy tools 

The right tools can transform data privacy compliance from a burden to a competitive advantage. Here’s a quick guide to a few essential privacy solutions that can help your business.

• Consent Management Platforms (CMPs): These tools help you collect, manage, and document user consent for data processing activities. An effective CMP makes consent transparent for users while giving you the records you need for compliance.
• Privacy policy generators: Creating clear, compliant privacy policies is easier with specialized tools that guide you through the process and help you update policies when regulations change.
• Cookie scanners: These tools identify and categorize the cookies and tracking technologies on your website, helping you maintain an accurate cookie notice and respect user preferences.

There are multiple data privacy tools and solutions companies can and should implement to create a privacy-aware culture, collect compliant user data across the globe, and build trust with their target audience.

How Usercentrics helps with data privacy

Navigating data privacy and relevant regulations can feel overwhelming. But Usercentrics Consent Management Platform (CMP) makes it easier for you to stay compliant and respect user rights while growing your business. 

Our consent management platform helps organizations collect, manage, and document user consent in alignment with global privacy laws like the GDPR and the CCPA.

With transparent consent mechanisms, real-time compliance monitoring, and seamless integration, Usercentrics enables businesses to maintain trust and meet legal requirements without disrupting the user experience. Prioritizing data privacy goes beyond compliance. It fosters a responsible and user-centric approach to digital interactions.