Importance of Updated Privacy Policies for Online Retailers
By: James M. Black II, Esq., Daniel J. Gershman, Esq., and Vaughn C. Collopy, Esq.
A comprehensive and regularly updated data privacy policy, along with clear online terms of use, is essential for retailers who engage with customers through websites, mobile applications, or social media platforms. These documents serve as critical risk-management tools, helping retailers protect customer information, maintain compliance with evolving legal requirements, and build trust with their online audience.[i]
Modern e-commerce operations collect a continuous stream of personal information, from names, addresses, purchase histories, payment credentials, geolocation data, and browsing habits. Each new data element creates both an opportunity to enhance the consumer experience and a corresponding obligation to handle that information in accordance with a proliferating array of privacy statutes, regulations, enforcement priorities, and civil-litigation theories. Because those legal requirements evolve at an accelerating pace, and because they vary materially from one U.S. jurisdiction to the next, online retailers that fail to review and refine their privacy-facing documents can quickly find themselves out of compliance, exposed to statutory damages, class-action litigation, regulatory investigations, and reputational injury.
Updated privacy policies and terms of use serve several interlocking functions. First, they satisfy “transparency” mandates that compel businesses to inform consumers, in plain language, about what data is collected, for what purposes, with whom it is shared, and how long it is retained. Second, they provide the contractual substrate for consent, arbitration, class-action waivers, choice-of-law provisions, and limitations of liability, each of which can meaningfully narrow litigation exposure if crafted in accordance with prevailing federal and state jurisprudence. Third, they operate as a living compliance map for internal stakeholders, guiding engineering, marketing, and customer-service teams toward practices that align with publicly stated promises and legal obligations. Finally, visible, consumer-friendly policies can enhance brand trust at a time when privacy ranks among the top concerns influencing online purchasing decisions.
Given the patchwork nature of U.S. privacy law, with its complex web of federal, state, and sector-specific regulations, the task of ensuring comprehensive compliance becomes uniquely challenging, as organizations must navigate a constantly shifting legal landscape that lacks uniformity and clear guidance.[ii]
At the federal level, specific vertical statutes govern children’s data (COPPA), email marketing (CAN-SPAM), phone and text outreach (TCPA), health information (HIPAA/HITECH), credit reporting (FCRA), and financial services (GLBA), among others.[iii] Meanwhile, an ever-growing group of states has enacted omnibus consumer-privacy regimes modeled in part on Europe’s GDPR but customized in ways that diverge on key definitions, rights, and enforcement mechanics. California’s Consumer Privacy Act of 2018 (CCPA) and its amending California Privacy Rights Act of 2020 (CPRA) remain the most mature examples, imposing notice, opt-out, and deletion rights backed by a dedicated state privacy agency and a private right of action for certain data breaches. Virginia, Colorado, Connecticut, and Utah now enforce similar comprehensive statutes, with Iowa, Indiana, Tennessee, Montana, Texas, Florida, Delaware, and Oregon slated to follow on staggered effective dates through 2025. Each of these laws sets distinct dollar- or record-count thresholds for covered businesses; each defines “sale,” “targeted advertising,” and “sensitive data” differently; and each articulates unique consumer rights, opt-in versus opt-out, universal-opt-out-mechanism recognition, appeal procedures, and cure periods, to name only a few variables.[iv]
Layered atop those statutes are state-level data-breach-notification laws, biometric-privacy acts (e.g., Illinois’s BIPA), and regulations governing auto-renewals, dark patterns, and loyalty programs. As a result, a single national-market retailer may be subject to a mosaic of overlapping and occasionally inconsistent obligations that shift whenever legislators amend a statute, regulators finalize interpretive rules, or courts issue precedent-setting opinions.
There is no one-time solution for such fluid terrain; instead, retailers must adopt a dynamic, governance-oriented approach to policy maintenance.[v] At minimum, that process should include:
- Quarterly legal reviews that cross-reference inventorying of data flows against the latest statutory definitions and enforcement guidance;
- Integration of new or amended consumer rights into the front-facing privacy policy, together with back-end workflow changes that allow prompt fulfillment of access, deletion, correction, and opt-out requests;
- Careful harmonization of policy language to ensure that commitments made to California residents, for instance, do not inadvertently create contractually binding promises to residents of states with less stringent requirements;
- Plain-language revisions that reduce the risk a court will deem provisions unconscionable or invalid as adhesive;
- Systematic updates to arbitration, venue, and class-action waiver clauses in the terms of use in light of the Supreme Court’s evolving Federal Arbitration Act jurisprudence and any emerging state limitations;
- Deployment of version-control protocols so that historical policies remain archived and discoverable, protecting the retailer’s ability to demonstrate compliance during the relevant period; and
- Operational readiness checks that verify marketing tags, analytics pixels, cookie banners, mobile-app permission prompts, and loyalty-program disclosures align with the newly updated policy.
Failure to execute on these steps entails both legal and business risks. Statutorily, many state privacy regimes authorize civil penalties ranging from $2,500 to $7,500 per violation, which regulators often calculate on a per-consumer, per-day basis. Plaintiffs’ attorneys continue to leverage wiretapping statutes against e-commerce chat functionality, while pixel litigation premised on the Video Privacy Protection Act, HIPAA, or state consumer-protection laws has proliferated.[vi]
Regulators are increasingly attuned to “dark patterns” that frustrate consent or withdrawal, heightening the likelihood of enforcement actions if disclosures are unclear. From a commercial standpoint, falling out of compliance can derail M&A transactions, invite negative press coverage, erode consumer confidence, and impair data-driven marketing or personalization initiatives that are central to competitive positioning in the retail sector.
Recent developments illustrate the stakes. The California Privacy Protection Agency has initiated rulemakings focused on automated decision-making and risk assessments that could require fresh disclosures as early as 2024. In June 2023, Sephora paid $1.2 million and entered into a compliance agreement with the California Attorney General over alleged CCPA violations tied to third-party analytics cookies, underscoring regulators’ willingness to pursue high-profile retail brands.[vii] On the litigation front, the California Invasion of Privacy Act (CIPA) has been invoked in actions against retailers for alleged unauthorized recording or interception of consumer communications, such as the use of session replay software on retail websites. Plaintiffs have brought CIPA claims where retailers allegedly failed to obtain consent before recording website chat interactions, leading to costly settlements and increased scrutiny of online customer service tools. Each of these actions hinged, at least in part, on the sufficiency of the retailer’s privacy disclosures and contractual terms.
In sum, the convergence of vigorous enforcement, private litigation, and escalating consumer expectations means that data privacy policies and terms of use can no longer be treated as static boilerplate. They are living documents that anchor a retailer’s overall compliance posture, contractual risk allocation, and brand narrative. Retailers that institutionalize a periodic, multidisciplinary review process that combines legal developments with technological change and marketing strategy will be best positioned to navigate the patchwork of state privacy regulations, mitigate legal exposure, and cultivate the consumer trust that fuels sustainable online growth.[viii]
Our team of attorneys understand the complexities involved in navigating data privacy regulations laws and encourage you to contact us if you are in need of assistance. Falcon Rappaport & Berkman is prepared to provide counsel regarding these issues and further guide you through the data compliance process. Contact our Corporate & Securities Practice Group at 516-599-0888 or by filling out the form below.
[i] Federal Trade Commission, Protecting Personal Information, FTC (https://www.ftc.gov/business-guidance/resources/protecting-personal-information-guide-business).
[ii] See C Kibby, US State Privacy Legislation Tracker, IAPP, https://iapp.org/resources/article/us-state-privacy-legislation-tracker/ (last updated July 7, 2025); see also
[iii] See generally, Summary of the HIPAA Privacy Rule, HHS, https://www.hhs.gov/hipaa/for-professionals/privacy/laws-regulations/index.html (last updated March 14, 2025); see also, 16 C.F.R. Part 312; see also, 12 CFR Part 1022 – Fair Credit Reporting (Regulation V), CFPB, https://www.consumerfinance.gov/rules-policy/regulations/1022/ (last updated Jan. 1, 2024).
[iv] See supra Note ii.
[v] See, e.g., Data Breach Response: A Guide for Business, Aug. 2023, FTC, https://www.ftc.gov/business-guidance/resources/data-breach-response-guide-business;
[vii] See, e.g., CCPA Enforcement Case Examples, CA OAG, https://oag.ca.gov/privacy/ccpa/enforcement (last updated on Aug. 24, 2022); see also, Attorney General Bonta Announces Settlement with Sephora as Part of Ongoing Enforcement of California Consumer Privacy Act, CA OAG, https://oag.ca.gov/news/press-releases/attorney-general-bonta-announces-settlement-sephora-part-ongoing-enforcement (Aug. 24, 2022).
[viii] See Brooke Auxier, Lee Rainie, et al., Americans and Privacy: Concerned, Confused and Feeling Lack of Control Over Their Personal Information, Pew Research Center, https://www.pewresearch.org/internet/2019/11/15/americans-and-privacy-concerned-confused-and-feeling-lack-of-control-over-their-personal-information/ (Nov. 15, 2019); see also, Cisco 2025 Data Privacy Benchmark Study, The Privacy Advantage: Building Trust in a Digital World, Cisco, https://www.cisco.com/c/en/us/about/trust-center/data-privacy-benchmark-study.html (2025).
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