Running a business is complex, and there is no end to the number of different domains that you’ll need to be familiar with if you want to be successful. Data privacy professionals might not need to ask what data privacy compliance is, but we can’t all be privacy pros, can we? To that end, let’s start with the basics: What is data privacy compliance, and why is data privacy important?  

What Is Data Privacy Compliance? 

Data privacy compliance refers to the practices, policies, and procedures an organization implements to ensure they adhere to all legal regulations and standards concerning their users’ private information. These regulations balance a company’s need for collecting user data and an individual’s right to control their personal information. 

But data privacy compliance also goes beyond simply complying with legal requirements. By pursuing compliance, a business also fosters a culture of responsibility toward users’ trust while ensuring the ethical use of their personal data. By doing so, businesses can create positive consumer experiences while fulfilling their obligation to secure valuable information, contributing to long-term organizational success in an ever-evolving digital landscape. 

Benefits of Data Privacy Compliance: Why Should You Care? 

As we’ll discover, data privacy compliance can be a lot of work. Is that work worth it? The answer is, unequivocally, “yes.” 

For most organizations, the first reason to become compliant is probably to avoid fines and penalties. Noncompliance penalties vary from law to law, but it’s not uncommon to see fines in the seven- or eight-figure range. In the following sections of this article, we’ll talk about some of the fine structures of the largest data privacy regulations. 

But there are more benefits to data privacy compliance than merely avoiding the unlikely but potentially crippling consequences of being fined. For one, compliance with these regulations helps protect customer privacy—in other words, it’s simply the right thing to do, which consumers recognize and appreciate. Data privacy compliance can foster trusting relationships, encourage customers to return to your business, and frame your organization as a reliable institution. 

On the other hand, failure to prioritize data privacy can also create a loss in consumer trust, harming your business and derailing long-term success.  

Lastly, becoming compliant with data privacy regulation forces you to engage in stronger data governance. It’s quite possible that your operations become more efficient as a result of becoming compliant. You’ll have to implement stricter protocols around the data lifecycle at your organization; stronger security controls; and more proactive, forward-thinking policies when it comes to collecting, processing, and storing personal data. The operational efficiency that results can be a powerful advantage over competitors who need to drop everything anytime they need to answer a question about the data they handle. 

Data Privacy Law: Major Regulations and Common Requirements 

Different jurisdictions often have unique data privacy regulations and laws, making it crucial to adhere to rules specific to your jurisdiction. While each law has its own requirements, data privacy compliance typically consists of certain common practices, such as the following: 

• Cybersecurity measures that prevent unauthorized access. 
• Transparent communication about how user information is collected, stored, and used. 
• Providing users with options regarding which parties receive their personal data. 
• Respecting users’ choice to opt out of data collection. In some jurisdictions, your organization may not be permitted to collect any personal information unless the user opts in first. 
• Respecting individuals’ rights and acting on specific requests relating to their personal data processing. 
• Ensuring third parties with whom you share consumer data meet certain security and privacy standards. 
• Transparent and timely communication regarding data breaches. 
• And so on. 

In this article, we’ll discuss how these and other requirements are treated in two major data privacy compliance laws: the EU’s General Data Protection Regulation (GDPR) and the California Consumer Privacy Act (CCPA; sometimes referred to by its related law, the California Privacy Rights Act, or CPRA). Both laws govern how organizations and individuals can process, collect, and store personal information and provide consumers with advanced control over the personal information organizations collect. 

Understanding these data privacy compliance laws is crucial to avoid hefty fines and consequences while protecting your customers’ trust in your organization. By adhering to transparent data practices and implementing robust security measures, businesses can comply with these regulations and enhance their reputation. 

Compliance With the GDPR 

The General Data Protection Regulation (GDPR) is a comprehensive data protection law adopted by the European Union (EU). The GDPR replaced the 1995 Data Protective Directive to help harmonize data protection laws across the EU member states. The GDPR applies to businesses within the EU and organizations worldwide that process the personal data of EU residents. Compliance with GDPR regulations is crucial. This regulation applies if any of the following criteria are met: 

• The business is based in the EU and processes EU citizens’ data. 
• The business offers products or services to EU citizens, even if it’s located outside the EU. 
• The business monitors the behavior of EU citizens, such as tracking their online activities. 

The GDPR follows seven core principles: 

1. Lawfulness, fairness, and transparency 
2. Purpose limitation 
3. Data minimization 
4. Accuracy 
5. Storage limitation 
6. Integrity and confidentiality 
7. Accountability 

Businesses must uphold numerous responsibilities using GDPR compliance solutions when processing EU citizen data, such as the following: 

• Have a lawful basis for collecting, storing, processing, or selling data. 
• If consent is the lawful basis, then it must be freely given, informed, and unambiguous. 
• DSARs must be honored, and data subjects have the right to request access to their data. 
• If a data breach occurs, relevant data protection authorities must be notified within 72 hours. 
• Businesses must have a designated data protection officer (DPO). 
• DPIAs and RoPAs must be conducted under certain circumstances. 

Data Protection Authorities (DPAs) investigate all complaints, provide advice on data protection matters, and take action against businesses that violate GDPR requirements. Unfortunately, each EU member state has its own DPA, who has their own particular guidance on the law. This can make complying with the GDPR across the entire EU very tricky for organizations who choose to take on compliance without seeking outside help. 

Yet getting compliant is very much in businesses’ best interest—noncompliant businesses can be fined over 4% of annual global revenue or €20 million, whichever is the higher figure. To support their compliance efforts without becoming distracted from their core business, many organizations rely on GDPR compliance automation solutions like Osano. 

If you want to dive deeper into the GDPR’s requirements, check out GDPR Compliance Regulations: The 12 Biggest Need-to-Knows. 

CCPA Compliance 

The California Consumer Privacy Act (CCPA) is a significant data privacy law enacted in 2018. While this pioneering legislation aimed at protecting the personal data rights of California residents, there were concerns about its limitations, and the act required stronger provisions, leading to the creation of the California Privacy Rights Act (CPRA) to amend CCPA’s existing provisions. 

The CCPA and CPRA significantly impact businesses operating in California, especially businesses that collect and process the personal information of California residents. CCPA compliance is crucial to avoid severe penalties resulting from noncompliance issues. The CPRA expanded the definition of the “sale” of personal data and introduced additional requirements that businesses must adhere to, making CCPA compliance more complex. A CCPA compliance solution like Osano helps businesses meet the following requirements and protections of the CCPA: 

• Consumer rights: Businesses must honor consumer requests, including the right to opt out of the sale or sharing of personal data, the right to access and delete personal data, and other requests. 
• Limited transfers of personal information: If a user requests it, businesses must not sell or share their personal information with external parties. 
• Limited use of sensitive personal information: sensitive information like social security numbers and health data must only be used for the primary purpose of the customer’s transaction. 
• Data minimization: Businesses must collect and retain only reasonably necessary data. 
• Risk assessments: High-risk collection or use of personal data requires risk assessments to identify and mitigate potential risks. 
• Contractual obligations: Before sharing, selling, or disclosing personal data to other parties, businesses must establish contractual obligations to protect data. 

CCPA compliance software helps businesses avoid severe penalties if regulations are not followed. CCPA enforcement is carried out by the California Attorney General and the California Privacy Protection Agency (CPPA). GDPR and CCPA compliance have significant penalties, such as the following for the latter regulations: 

• $2,500 per violation. 
• $7,500 per intentional violation. 
• $7,500 per violation involving the personal data of a minor. 

Learn more about the specifics of the CCPA and CPRA in The Expert's Guide to California Data Privacy Law | CCPA & CPRA. 

A Note on Data Privacy Policies 

Regardless of which regulations you are subject to, a robust data privacy policy is essential. In fact, even if you aren’t subject to a data privacy law, a privacy policy is still a good idea. Not only does it help you define your data handling processes, but it also protects your organization from false accusations and demonstrates your trustworthiness to your customers. 

Data privacy policy requirements differ from regulation to regulation, but they generally contain a few commonalities. We mention them here because if you go through the exercise of drafting a data privacy policy, you’ll be well on your way to data privacy compliance. As an example, a GDPR-focused data privacy policy might contain the following core features: 

• Introduction and overview of the policy 
• Company’s responsibilities 
• User’s responsibilities 
• Information on the data collector and DPO 
• Explanation of the types of personal data collected 
• Lawful basis for data processing 
• Explanation of the purpose of data processing 
• Data subject rights 
• Information on data security measures 
• Information on data transfer regulations 
• Guidelines in the event of a data breach notification 
• Acknowledgment of the potential for guidelines to change and update over time 

If you’d like to dive deeper into the basics of crafting a robust data privacy policy, check out The Ultimate Privacy Policy Checklist.