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In today’s digital business world, most websites leverage cookies for multiple purposes, such as tracking user activity or offering targeted customer adverts. However, it is essential to understand that various risks arise when using cookies on a website. This article explores some of these risks and the critical legal rules to consider when using cookies on a website.
What Are Cookies?
A cookie is a small text file stored on a user’s device, such as a computer, smartphone, or tablet. These small text files allow businesses to recognise individual users and retain specific information about them.
There are various cookies, each serving a distinct purpose. For instance, there are session cookies and persistent cookies. Some websites also deploy third-party cookies, and common cookies used by businesses include Google Analytics.
Businesses often use cookies to enhance user experiences and optimise their online platforms. For instance, an e-commerce website might use cookies to remember a customer’s preferences, track website traffic for analytical insights, or help remember selected items in a customer’s shopping cart which they have left in their basket.
Conducting a cookie audit is vital to understanding which cookies are in use on a website. Due to the technical nature of this task, it often requires collaboration with website developers or other technical experts. This is because business owners often lack the expertise to know which types of cookies are present on their websites.
Are There Laws Governing Cookies?
Website owners must understand that cookie use is heavily regulated and carries risks. The primary legislation governing cookie use in the UK is the Privacy and Electronic Communications Regulations (PECR). PECR sets various rules that website operators must take seriously and ensure that they comply with. If cookies have the potential also to collect personal data, further user privacy laws apply under the UK GDPR.
Some of the critical rules include the following:
- websites must usually obtain user consent through cookies before storing or accessing information on their devices (except for essential cookies). This consent must be freely given, specific, informed, and unambiguous. Pre-ticked boxes or buried cookie information will not meet this high standard. Users should have the option to control and manage their cookie settings. As such, there are a lot of requirements to follow when using cookies; and
- websites also need to provide clear and easily accessible information about the cookies they use, explaining their purpose, duration, and any third-party involvement. This is often presented in a thorough cookie policy document. A cookie policy is a comprehensive document explaining a business’s approach to using cookies on its website. It provides transparency about the types of cookies deployed and grants users information on controlling their cookie preferences.
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What Are Some Risks to Consider When Using Cookies?
Using cookies on a website can be high risk if legal rules are not complied with. A significant risk associated with cookie use is the potential to breach cookie law rules. Breaching PECR regulations can lead to severe adverse business outcomes with substantial repercussions.
For example, breaching cookie law rules can result in the following negative implications:
Enforcement Measures
The UK ICO (the data protection regulator) can use various enforcement powers to address PECR breaches, including criminal prosecution and issuing monetary penalties of up to £500,000 against organisations.
The ICO has taken various enforcement actions against businesses for breaching cookie law rules, highlighting the vital need to prioritise compliance with stringent legal requirements.
Reputational Damage and Loss of Business
Non-compliance with PECR can harm businesses’ reputations. In our world, where data privacy is a top concern, any perception of mishandling privacy rights can destroy consumer trust. Negative publicity from PECR breaches can damage a company’s brand image and strain relationships with customers, partners, and other stakeholders.
This factsheet sets out how your business can become GDPR compliant.
Cookies can also generally raise privacy concerns for many users. The idea of websites invisibly tracking their browsing habits and interests to target ads can feel intrusive to individuals innocently browsing a website. A constant bombardment of personalised advertising, often based on past searches, can be frustrating and make users feel like their privacy is being invaded. Further, the complexity of cookie consent banners, usually filled with legalese and confusing options, can frustrate users who simply click ‘accept’ to get rid of the pop-up without genuinely understanding what data is being collected by cookies. As such, there is a strong need to ensure transparency for users when using website cookies. Otherwise, there is a risk that a business could lose potential sign-ups, visitors, and even customers. As such, companies need to consider the commercial risks around cookie use, not just the legal risks.
By complying with PECR rules when using cookies, businesses can minimise risks, protect their reputations, and build genuine trust with website users.
How Can a Business Reduce Risk When Using Website Cookies?
A business can take various steps to reduce risk depending on how it uses website cookies.
Some general steps to reduce risk include the following:
- taking early legal advice on using website cookies and which rules apply. If you need support with this, a data protection lawyer can advise your business on steps to minimise legal risk;
- implementing a clear and concise cookie consent banner that explains cookie usage, as this provides an easy way to grant or withdraw consent and allows users to manage their cookie settings; and
- drafting a detailed cookie policy explaining the types of cookies used, their purposes, data retention periods, and any third-party involvement. ;
- making it simple for users to control their cookie preferences. This could include options to accept all cookies, reject non-essential cookies, or manage individual cookie categories; and
- reviewing cookie practices and policies to ensure they comply with changing laws and user expectations.
Key Takeaways
Cookies are small files that store information about website users. While they can be helpful for businesses to personalise user experience and target advertising, they also come with legal and commercial risks. Companies must follow the legal rules under PECR to obtain user consent and provide transparent information about cookie use where required. Failing to do so can lead to fines, reputational damage, and enforcement action. To minimise these risks, businesses should obtain legal advice, implement transparent cookie policies and give users control over their cookie settings on a website.
If you need help with cookie law compliance, LegalVision’s experienced data, privacy, and IT lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers who can answer your questions and draft and review your documents. Call us today at 0808 196 8584 or visit our membership page.
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