In the current digital age, businesses are amassing an unprecedented amount of data and personal information from data subjects. As a result, there is a more significant need for data protection due to the ever-increasing concern for potential data breaches and privacy concerns.
The European Union (EU) introduced the General Data Protection Regulation (GDPR) to address these growing concerns. The GDPR is one of the most stringent data protection and privacy laws, and it aims to empower individuals with greater control over their data while simultaneously holding organizations accountable for handling and processing customer data.
For businesses operating in the EU, it is essential to understand and comply with the privacy laws of GDPR. Organizations that aren’t able to comply will face both financial penalties and reputational damage.
Prioritizing GDPR compliance is not only about protecting data but also assists in building trust with customers, clients, and partners in this increasingly data-driven world.
What is GDPR?
The GDPR was introduced in May 2018, replacing the outdated Data Protection Directive 94/56/EC. The law applies to all EU member states and organizations outside of the EU that handle EU people’s personal data. When the EU decided to implement GDPR, they took a strong stance on the protection of data privacy and the security of their people (i.e., data subjects).
The GDPR aims to protect “personal data,” this includes:
- Email addresses
- Identification numbers
- Online identifiers
- Location data
- Ethnic organic
- Political opinions
- Religious beliefs
- Health data
- Biometric data
The EU takes this stand due to the technological advancement of the internet. A desire for greater business value has caused companies to increase the collection and processing of sensitive data. With this advancement, there are concerns regarding personal data breaches, identity theft, and misuse of personal data. As a result, the previous laws can’t protect EU residents sufficiently.
By implementing GDPR, the people of the EU can feel at ease. The law provides a more robust and comprehensive data protection law.
The purpose of the GDPR’s implementation is to:
- Provide increased protection of individuals’ data.
- Grant more significant control over the use of their information.
- Establish a streamlined set of regulations across the EU regarding data protection laws and enforcement.
Until today, GDPR has created a more transparent, accountable, and secure environment for processing personal data. It has made a huge difference! Even states in the United States strive for similar privacy protection with their new privacy laws.
GDPR Data Protection Principles
Understanding its seven data protection principles is essential for comprehending GDPR compliance.
- Lawfulness, Fairness, and Transparency: Companies must process personal data lawfully, fairly, and transparently.
- Purpose Limitation: Data collected should be processed and used for the legitimate and specified purpose explained to the subject when it was collected.
- Data Minimization: Only retain data if relevant, adequate, and needed for its intended purpose.
- Accuracy: Companies need to keep personal data up-to-date and accurate.
- Storage Limitation: Only store personal data for as long as needed for its intended purpose.
- Integrity and Confidentiality: Organizations need to have appropriate security, integrity, and confidentiality measures in place to protect personal data
- Accountability: Companies are responsible for demonstrating GDPR compliance and maintaining records of data processing activities.
Regarding GDPR, companies should also be aware of Schrems II compliance. The Schrems II ruling addresses transferring personal data from the EU countries outside the European Economic Area (EEA). However, since there is a new EU-US Data Privacy Framework in place, the EU has granted the United States data transfer adequacy once again.
If data transfers are necessary for your business, it’s a good idea to consult legal counsel about the best data transfer mechanism for your situation.
GDPR Article 30 requires companies to have records of their processing activities. This article explicitly states the importance of having a record of processing activities (ROPA) to meet GDPR requirements adequately. Data inventory and mapping, while not expressly required, can help record this.
Who Does GDPR Apply to?
With all the information above, you may still need clarification about whether GDPR applies to your business. Three situations your company might want to consider include:
- GDPR is applied to businesses in the EU and EEA that process personal data, regardless of where the data processing is taking place. Learn more about whom GDPR applies to in, When, Where, & Who Does GDPR Apply to?
- Organizations are responsible for complying with GDPR when they process the personal data of EU/EEA residents, regardless if a payment occurs. Including online businesses, e-commerce platforms, and service providers who handle this information.
- GDPR applies to organizations that process the personal data of EU/EEA citizens to monitor their behavior. Tracking online activities such as cookies or targeted ads are included.
Why is GDPR Compliance Important for Organizations?
GDPR compliance is essential for businesses everywhere as it can help provide the best framework to protect individuals’ privacy and personal data. Organizations can build trust with customers, partners, and stakeholders by demonstrating their commitment to guard sensitive personal data and respect individual rights.
Businesses operating in the EU and EEA should advocate to ensure their business is GDPR compliant. It helps avoid fines and penalties related to non-compliance and creates a positive reputation that can give your business a competitive advantage. Considering today’s data privacy-aware consumers, demonstrating GDPR compliance also assists in retaining these customers.
Impact of GDPR on Businesses
GDPR is also vital due to the impact that it has on companies. With the significant changes to data protection it brought to businesses worldwide, organizations need to understand better how to handle data to stay compliant. Some ways we can see that GDPR impacted organizations include:
- Increased Data Protection Compliance
- Individuals now have more control over their data
- More difficulty with cross-data border transfers
- Larger fines for non-compliance
- Impact on Marketing Practices
GDPR in the US: Impact of GDPR Compliance for US Companies:
Despite GDPR originating in the EU, it is not solely an EU concern and significantly impacts US companies. Some ways GDPR affects US companies include:
- Global Reach – US companies that collect or store the personal data of EU citizens must be GDPR compliant; otherwise, they face the same legal implications as EU companies that are not compliant.
- Enhanced Data Protection – Since GDPR has set a higher bar for data protection, privacy, and security, US companies that operate in the EU will improve their data handling skills.
- International Data Transfers – Companies that transfer personal data from the EU to the US must comply with GDPR’s data transfer restrictions. Implementing data transfer mechanisms, such as SCCs or BCRs, ensures lawful data transfers and avoids potential disruptions in business operations.
How to Execute Marketing Under GDPR Regulations
Marketing under GDPR requires businesses to adopt a privacy-centric approach that puts customers and prospects first. To ensure GDPR aligns with marketing efforts that focus on data protection, companies should look to:
- Obtain explicit consent before processing personal data for marketing purposes
- Offer opt-out options for marketing communications
- Only collect the minimum information necessary for marketing campaigns
- Implement vigorous cybersecurity to protect customer data from data breached
- Educate the marketing department on GDPR best practices
- If marketing activities involve third-party vendors, they also need to be GDPR compliant
GDPR Regulations Enforcement and Penalties for Non-Compliance
For those not in compliance with GDPR but operating in the EU, there will be severe consequences for their business, not only in the form of penalties but also in the form of reputational damage.
- Up to 10 million euros or 2% of global turnover (whichever is higher) for less severe violations such as incorrect record keeping or failure to notify of a personal data breach.
- Up to 20 million or 4% of global turnover (whichever is higher) for more severe violations such as breaches of individual rights, failure to obtain proper consent, or unlawful data processing.
How TrustArc Can Help Protect Your Business Assets
As you may have noticed, ensuring GDPR compliance is crucial for businesses operating in the EU. To help achieve GDPR compliance, TrustArc offers comprehensive solutions that can help transform your business and protect your financials and reputation from risk.
Our privacy management platform, PrivacyCentral, provides an all-in-one solution to help you automate tasks to ensure GDPR compliance.
Our data inventory and data mapping solutions will help you understand how data moves through your organization, identifying any potential risk to ensure GDPR compliance.
Additionally, we provide vendor risk management solutions to help you mitigate the risk and manage your third-party vendors to ensure they comply with GDPR requirements.