Purpose
Data is collected because an organisation wants or needs to do something with it. European law requires that these purposes are stated up front. You can find out the purposes data is used for in the full privacy statement.
Each purpose is also supported by a legal ground that makes the processing legal. For example, you may have given permission for the processing of your data for a specific purpose. European law distinguishes six possible Legal grounds.
Purpose limitation
It's useful to know that in Europe an organisation has to be clear about what they are collecting pieces of data for. What's more, data may not later be used for another purpose if that purpose wasn't initially disclosed. For example, if an organisation states it only collects your email address to facilitate a business transaction, that email address cannot be used for other purposes, such as advertising.
Data minimalisation
In Europe there are restrictions on what can be collected. Personal data "shall be adequate, relevant and limited to what is necessary" in relation to the purposes for which they are processed. In other words, to run a mailing list it's probably not necessary to also collect people's phone numbers.
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Anything you do with personal data is called processing. You can think of collecting or storing data. Updating, arranging, deleting, distributing or other forms of making available are also processing operations. An example of processing is receiving of application forms and CVs from new employees. Anonymising personal data is also a processing, because it is a form of erasing or destroying personal data.
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