Best Data Protection Practices for Small Business Apps

If you are a startup or small business launching a new app, you have exciting times ahead. Developing an app can help grow your business, improve your customer engagement, and open up new avenues for sales and growth. However (as a small business or start-up), it is essential not to overlook legal requirements – particularly data protection law rules. Apps tend to collect large amounts of personal data from users often. As such, they are subject to strict data protection laws and rules. Ignoring these obligations can lead to enforcement action, reputational harm, and financial penalties. This article explores key issues around data protection requirements and how your business can adopt best practices to support compliance for your app. 

Why is Data Protection Important for Small Businesses?

Data protection is a legal requirement and key to maintaining customer trust in today’s business world. Small businesses are just as accountable as larger companies regarding compliance. But they may lack the resources to recover from enforcement action or a serious data breach, making them all the more vulnerable. 

Taking protective steps to limit data collection, secure personal data, and follow compliance best practices can help your business reduce risks and protect its reputation.

What Data Protection Laws Apply to a Small Business App?

UK GDPR (supplemented by the Data Protection Act 2018) governs how your business collects, stores, and processes personal data. These legal rules apply regardless of your business size. If your app collects user information (even if you are a start-up and collect basic contact details), you must still comply with data protection law obligations. 

These rules cover a range of obligations, from providing users with privacy information to establishing a lawful basis for processing personal data to securing data and deleting it when it is no longer needed.

A key requirement around data protection is transparency. If your app collects personal data, UK GDPR requires you to provide clear privacy information before users sign up. A privacy policy can explain what data your app collects, why it is needed, how long it is retained, who it is shared with, and how it is protected. 

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Users must understand their data protection rights before they provide any personal information. The most common way to deliver this information is through a privacy policy displayed within the app, e.g. as a pop-up or link before account registration. 

Your app should only collect the personal data necessary for its intended purpose. Gathering excessive or irrelevant information increases compliance risks and can undermine user trust. A data minimisation approach can help you meet legal obligations and limit the risk of data breaches and misuse.

In addition to minimising data collection, your business must implement strong security measures to protect user information. Encryption, access controls, and regular security assessments help safeguard personal data from unauthorised access, alteration, or loss. Given the high volume of data apps handle, a proactive security strategy is essential to prevent breaches and reduce risk. 

How Does PECR Affect Mobile Apps Using Cookies and Tracking?

In addition to the UK GDPR, the Privacy and Electronic Communications Regulations (PECR) set additional requirements for using cookies or tracking technologies. If your app deploys cookies, you must comply with these rules.

For example, if your app uses cookies, PECR requires you to inform users and, in most cases, obtain consent before storing them. A clear cookie policy can explain what cookies your app uses, their purpose, duration, and any third-party access. Conducting a cookie audit to check how your app uses cookies in practice can help ensure compliance and that your cookie use disclosures are accurate. 

Do Any Other Legal Rules Apply?

Depending on your app’s operation, your small business may also have other legal obligations. If your app involves e-commerce and sells to consumers, your business must consider consumer protection laws. If your app targets and collects data from customers outside the UK, your company may also need to comply with international laws.

A data protection lawyer can help your business determine which laws apply to your app’s data collection and processing. Legal guidance can be critical in complicated scenarios, such as when your app collects higher-risk personal data, including:

• health, biometric, or financial information;
• uses AI or automated decision-making;
• targets children; or
• operates in multiple countries and requires compliance with international privacy laws. 

In this case, you may need specific advice on various issues and local law advice from international lawyers. As a small business, investing in legal advice can help you ensure you know your obligations from the outset and start on the right track to build strong compliance practices and minimise risk. 

Key Takeaways

Small businesses operating apps must ensure they comply with data protection laws to avoid fines, reputational damage, and legal risks. UK GDPR will apply to any business collecting personal data, regardless of size and is particularly important for apps – where a significant amount of data is typically collected. Small business owners operating apps must prioritise compliance to avoid risk. 

If your business needs legal advice on data protection compliance for your app, our experienced data and privacy lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.

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