GDPR Applies to US Firms

by Norris McLaughlin & Marcus, P.A.
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[guest author: Stanislaw Kastory*]

The European Data Protection Regulation is to come into force on 25 May 2018 (the “GDPR”). It introduces many far-reaching changes in data processing, including the possibility of the supervision authority to impose high fines for processing data in breach of the law (up to EUR 20,000,000 or 4% of global turnover).

The GDPR imposes many new obligations and gives many new rights to controllers and processing entities. They will, e.g., be required to introduce a procedure enabling data subjects to exercise the ‘right to be forgotten’, the right to data portability, restriction of processing and to object to data being processed. These changes will to a large extent concern the IT aspect that will have to be adjusted to the new GDPR procedures and rules.

The entry into force of the GDPR also means changes for companies based outside the UE. According to article 3(2) of the GDPR, the GDPR applies to processing of personal data of data subjects who come from the European Union, by a controller or processing entity not established in the European Union if the processing activities relate to:

  1. a) the offering of goods or services to such data subjects in the European Union and
  2. b) the monitoring of their behaviour.

This means that, e.g. a US insurance company not based in the EU will be subject to the GDPR (and all the requirements thereunder) if it offers its insurance products to entities in EU countries. The new GDPR will also apply to all companies offering “suggestions” used for example on YouTube, Instagram or Spotify. Suggestions that you may like someone’s profile or music are based on processing of personal data. If a US company makes such suggestions to EU citizens, it will automatically fall under the ambit of the GDPR.

However, the GDPR does not only apply to big players. If you are a local whisky producer in Kentucky and you send 10 bottles to a client in France, you are also required to respect the new European regulation. Generally speaking if your business in any way relates to EU citizens, you should not disregard the GDPR.

According to research, more than 50% of US companies will be required to implement the GDPR requirements. This means that US controllers/processing entities will have to process personal data in compliance with the EU regulation. They will therefore be directly required to ensure they have the appropriate legal basis for data processing, to meet the requirement of informing data subjects and to implement new procedures and documents under the GDPR. US entities falling under the ambit of the GDPR will have to implement the GDPR in their organisations.

Ignoring the personal data processing and protection rules in accordance with the GDPR can lead to severe fines being imposed on controllers/processing entities of up to EUR 20,000,000 or 4% of global turnover, whichever is the higher. The number and importance of the changes to data protection require companies to examine the issue of personal data protection in their organisations and sectors, and to duly prepare for the changes awaiting them on 25 May 2018.

Recommendations:

  1. Access all your data sources. Investigate which personal data concerns EU citizens, how the data is stored, how it is used, who has access to it and with whom it is shared.
  1. Decide how to perform the GDPR requirement. You can:
  • have your own team process the data, and lawyers will act as project coordinators;
  • hire an independent advisor.

*This post is authored by Stanislaw Kastory of the Poland law firm Domański Zakrzewski Palinka sp. k.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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