Every day it seems like we lose a little more anonymity. Everywhere we go, people want a taste of our private information. Whether you're checking in at the airport, signing up for a gym membership or paying bills at the bank, you can’t do any of these things without giving up a few scraps of personal data. The same goes for making use of all the great sites and services offered by the internet. Whether you’re using a free email account, like Gmail or Hotmail, trawling eBay for deals or signing up to find a bit of companionship on a site like Plentyoffish.com, you are expected to provide any number of personal details.

But how is the information you provide online used? The answer might surprise you.

What Information Is Shared About You Online?

Before we can address the ways your personal information is used – and sometimes abused – online, let’s talk about the two different kinds of information that online service providers, retailers and websites collect from users when they access the internet.

Personally Identifiable Information (PII)

PII can include data, such as your name, address, banking credentials and even your internet access location – be it your personal computer or on the go with a tablet or smartphone.

Non-Personally-Identifiable Information (NPII)

The second, and somewhat less menacing, type of data collected as a result of your time online is known as NPII, which is when a website counts how many visitors it attracts on a daily basis, or what site content is clicked the most by users. The difference here is that the website is not interested in individual users, but how they behave collectively. (Read more about this kind of data in Web Analytics: Terms You Need to Know.)

PII and NPII are collected online through a number of methods. In some cases, users knowingly hand over their personal information. Providing an online retailer with your delivery address, uploading a location-tagged photo to a service like Flickr, or checking in with a service like Foursquare are great examples of this. When it comes to NPII, one of the most popular methods for collecting data is through the use of HTTP cookies – data stored on a site visitor’s computer, smartphone or tablet that provide the website with the user’s preferences, such as the contents of an online shopping cart, or the settings associated with a user’s previous visits.

Who's Using Your Personal Information Online

In the same way that a firearm can be wielded as either a tool or a weapon, your personal information can be used to benefit you and/or put you at risk. Some services and websites use PII and NPII to enrich your time online. For example, when you go shopping at Amazon.com, Amazon retains information about your searched and purchased products and uses that data to suggest other products of interest. Provided you’re able to exercise a bit of willpower and not click your way into the poorhouse every time Amazon serves up something new and tantalizing, such suggestions are a great way to discover new products that you may well end up loving.

That said, it’s also possible for websites, hackers and other online ne’er-do-wells to use your personal data to make your life – online and offline – a living hell. For example, the personal contact information required to create a profile on an online forum can be sold to internet marketers that may use that information to spam your email account with unwanted offers detailing dubious-looking products or tips on how to a buy into a Nigerian prince’s discarded fortune. In extreme cases, users have entrusted personal information to questionable web services or insecure websites – only to discover that criminals used their information to hijack their identities, online accounts or even procure new credit cards – all things that are guaranteed to leave you feeling angry and violated. Undoing them is also a huge inconvenience and can take years.

How To Protect Your Online Privacy

So does protecting your personal information mean you have to limit your internet exposure to a few terse emails? Or avoid shopping, social media, forums and any other services that ask for information about you? Not if you're careful. The following are a few tips even the least web-savvy internet denizens can follow to ensure safe surfing.

  • Only frequent sites that offer a clearly defined privacy policy that outlines how the personal information you submit will be used.
  • Use a "throw away" email address or alias when posting to forums or signing up for web services with questionable privacy policies. This will help you protect yourself from spam and other unwanted solicitations.
  • Never submit highly sensitive personal information, such as your home address or credit card number, to a site unless you know it is secure/encrypted.
  • Only use web browsers that support private browsing. These include Safari, Firefox or Chrome. Private browsing prevents your browser from storing or transmitting your browsing habits to offsite services.

What They Know

The notion of online privacy is a tricky subject. While news of new privacy rules on Facebook or Google often gets users up in arms, the fact is that while there is a lot of information shared about you over the web, most of it is not personal. That isn't to say that invasions of personal privacy do not happen, but most websites actually collect data to improve user experience and boost business – not to scam you. The good news is that when it comes to real fraud, you can often protect yourself with a little know-how and common sense. (Want to read more? Find out about some common Facebook frauds in 7 Signs of a Facebook Scam.)