As a business, protecting the data of your customers is a legal obligation you have. However, it’s also an important way to  build a trusting relationship with them. 

When customers trust your business with their data, it’s your responsibility to make sure that their data is not misused in any way. 

In this article, we’ll go through how you can protect customer data, your legal obligations around customer data and other risks you may come across. Read on to learn more. 

What Should I Know About Customer Data Protection?

Data is an extremely valuable resource to possess. It can help businesses better understand their customer base and elevate their experience accordingly. 

On the other hand, the misuse of data can be detrimental for both customers and businesses. 

As a result, protecting the data of customers should be a high priority for all businesses.  

Why Should I Protect Customer Data?

When data is exposed, it can put both you and your customers at risk. Hackers can cause harm with the personal information of individuals, such as their names, addresses, contact information and bank account numbers. 

This kind of identifying information is classified as personal information, which attracts high levels of protection under Australian privacy laws (we’ll cover this in more detail later). 

For your business, if you have failed to take reasonable measures to protect your customers’ data and it results in a data breach, you can be held responsible. 

Moreover, when customer data is hacked, it can be detrimental to your business overall as it will negatively impact your business’ reputation, productivity and finances. 

Australian Privacy Laws: What They Say About Customer Data

Australian privacy laws strictly regulate how businesses need to be handling customer data. 

As a business, you mainly need to look out for the Privacy Act 1988 (the Privacy Act) and the Australian Privacy Principles (APP). 

These regulations set out rules of the types of businesses that need to engage in data protection, the standards for protecting customer data and the kinds of data that can be stored. 

Not following these regulations can lead to legal consequences so it’s a good idea to familiarise yourself with them

If you have any questions, feel free to reach out to our legal experts to get some clarification. 

The Privacy Act and the APPs also enforce the notifiable data breaches scheme. According to the scheme, in some circumstances where a data breach regarding the personal information of others has occurred, that business needs to contact the Office of the Australian Information Commissioner (OAIC) and let them know. Impacted individuals must also be alerted in compliance with these rules as well.  

How Can I Protect Customer Data?

Customer data is protected by identifying the risks and then taking measures to eliminate them. 

If your business ever finds itself the victim of a hacking, the main question to be asked is who is liable for losses. This requires consideration of whether or not reasonable measures were taken to protect customer data to begin with. 

So, if your business did not have the right measures in place to prevent data breaches (such as investing in a strong cyber security system), then you could be held liable for the losses resulting from the data breach. 

Once you have established that you possess information from your customers that needs to be protected, your business needs to implement protective measures.

When doing so, it’s wise to understand the potential risks you are safeguarding against.  

What Are Cyber Security Risks?

Cyber security risks refers to the dangers businesses are exposed to when their internal, online systems are compromised.

Information such as personal data, intellectual property, client lists and other private business matters can be used against a business and their customers when they are in the wrong hands. 

Common types of cyber security risks include: 

  • Data spills
  • Hacking 
  • Identity theft 
  • Phishing 
  • Scams
  • Malware

It’s important to build a strong cyber security system in order to protect your business from such risks. 

How To Build A Strong Cyber Security System

There are a number of options and methods when it comes to building a strong cyber security system. It really is up to you to decide what will work best for your business. 

Some ways businesses can make their cyber security systems strong involve: 

  • Only collecting  necessary data
  • Limiting who has access to the data
  • Delete data once there is no use for it 
  • Consistently update your protection methods (such as passwords)
  • Get a Data Breach Response Plan – in case a breach does occur, this can help your response be more efficient

You might also consider undertaking a Privacy Impact Assessment (PIA). 

A PIA looks at your project (or business in this case) as well as its goals. It then conducts an analysis to determine whether or not the current systems you have in place are sufficient for protecting data. If not, the PIA will identify any weaknesses and make recommendations for improvement.   

The Australian government also provides an online Cybersecurity Assessment Tool that you can access to determine how your businesses current privacy practices measure up.  

Do I Need A Privacy Policy?

If you are collecting the personal data of your customers, there is a strong chance you will need a Privacy Policy on your website. 

A Privacy Policy is a document that customers can view, letting them know how their data is being used and collected when they are visiting your website. 

Generally, a privacy policy is required for businesses that have an annual turnover of more than $3 million. 

Even if your business has an annual turnover amount that is less than $3 million, you may still be required to have a privacy policy. 

Essentially, any business that is covered by the Privacy Act must follow the APP. This includes businesses that: 

  • Collect any kind of data from their customers
  • Have a commonwealth contract to provide a service
  • Offer health services or obtain health information from their customers
  • Buy and sell data 

If your business checks even one of these points, then you are likely required to have a privacy policy. 

Do I Need A Cyber Security Policy?

Generally, there is no legal requirement to have a Cyber Security Policy in place. Nonetheless, businesses still choose to get one in order to better protect their data. 

As you’ve probably come to understand, protecting yourself online is about more than just setting a really good password. Rather, it involves a synchronistic effort from all aspects of your business including staff, management and the internal systems you have in place. 

A cyber security policy is the official document all employees of the business have access to. 

It details the procedures and day-to-day steps that are involved in making sure data remains secure. Cyber security policies often include: 

  • Who can access what systems and information
  • What information can be shared
  • The assets that need to be protected
  • They steps employees need to take to keep everything protected 
  • How data is to be handled 
  • Cyber security training
  • Insurance coverage related to cyber security 
  • Confidentiality matters 

What Other Legal Documents Do I Need?

When it comes to establishing your business’ cyber security, there are a few other legal measures you can take to increase protections. 

Correctly utilising certain legal documents can help in safeguarding the things you want to keep private. 

We’ve listed some common ways legal documents are used to protect a businesses privacy below. 

Confidentiality Agreements

Confidentiality agreements are used when you do not want others to reveal private information about your business. Confidentiality agreements or confidentiality clauses are often used in contracts to keep certain pieces of information private. 

For example, you might keep a confidentiality clause in your Employment Contracts. That way, employees are aware of what they can and cannot talk about to people outside of work. 

Confidentiality agreements can be used to protect your business’ internal systems and data. For example, if an employee decided to leave the business and start working with a competitor, they cannot take the information of your current client list with them. 

You could also restrain ex-employees from disclosing certain things by placing restrictions on their future employment altogether. Businesses do this by inserting a Non-Compete Clause into their Employment Contracts, so that employees do not find future employment with the business’ competitors and disclose important business information or trade secrets

Non-Disclosure Agreements

Non-Disclosure Agreements (NDAs) are also a legally binding agreement that holds the signing parties to a particular degree of secrecy. 

NDAs are often signed before a certain event can occur. For example, a potential investor viewing a business plan or an IT expert installing software onto the company’s systems will need to sign an NDA before they can get started.  

When you are exposing potentially vulnerable parts of your business to someone, an NDA can be useful in helping keep that information secure. 

You can learn more about why NDAs are important here

Key Takeaways

Protecting customer data is essential for all businesses to be legally compliant, protect their customers and their business. To summarise what we’ve discussed: 

  • Customer data protection is ensuring that unauthorised people do not get access to the private information of your customers
  • The Privacy Act and the APPs largely regulate this area
  • In order to protect customer data, you need to assess your risks and take active measures to minimise them 
  • Building a strong cyber security system is essential in achieving this
  • You might be legally required to have a privacy policy 
  • Consider getting a cyber security policy for you workplace
  • Legal documents (such as NDAs) can also help in protecting your data 

If you would like a consultation on protecting customer data, you can reach us at 1800 730 617 or for a free, no-obligations chat.

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