What is data privacy compliance?

Data privacy compliance is all about ensuring your business abides by established legislation and guidelines for safeguarding customer information.  

While ensuring data is secure has long been a focus, data privacy is becoming increasingly relevant because of comprehensive regulations and standards, like the GDPR, that exist to ensure data is properly safeguarded against unauthorized access.  

Understanding data privacy regulations

There’s no shortage of data privacy compliance standards, each specific to the state or country it applies to. However, the following three examples, and in particular, the GDPR, cover the core principles well.  

For a more comprehensive list covering the Australian Privacy Act 1988, visit our guide to data privacy for more information.

1. General Data Protection Regulation (GDPR)

The GDPR came into effect back in 2018 as the European Union’s (EU) all-encompassing law for data privacy. It is one of the most comprehensive, robust data privacy law in the world.

The goal of the GDPR is to give consumers power over their personal data. For businesses, this means adhering to several principles, including handling personal data responsibly, having secure user access control, practicing data minimization, and being transparent about how user data is collected, stored, and used.  

The GDPR is expansive, with dozens of factors to consider. If you fail to comply, you may be subject to serious fines. Minor violations may lead to a penalty of up to €10 million, or 2% of the company's global annual revenue from the previous financial year, whichever is greater.

For severe violations, the punishment can be up to 4% of your global turnover or 20 million Euros, whichever is greater.

My business is based in the US, does this law apply to me?

The GDPR is designed to protect EU data subjects’ rights. If a US business targets or collects the data of EU citizens, then the US business is subject to compliance with GDPR under EU privacy law.

2. Health Insurance Portability and Accountability Act (HIPAA)

The HIPAA is a federal regulation enforced by the Office for Civil Rights (OCR). The legislation aims to protect patients' medical records and personal information in the healthcare industry.  

Under the HIPAA legislation, all covered entities (those that provide healthcare services) and business associates (those providing services to covered entities) need to safeguard protected healthcare information (PHI), implement safeguards, and conduct regular risk and compliance assessments to protect data against unauthorized access.

The fines for breaching HIPAA can be steep. A violation can cost you up to $1.5 million per year.  

3. Gramm-Leach-Bliley Act (GLBA)

The GLBA is a US federal regulation exclusive to financial businesses—such as banks, investment firms, and lenders.  

Like the healthcare industry, the finance sector is a lucrative target for malicious individuals. Financial businesses store a range of sensitive customer information. Bad actors can use this data to take out falsified loans, open new bank accounts, and steal identities.  

The GLBA regulatory requirements are very similar to that of the HIPAA. They require companies to keep sensitive information private, be completely transparent with their customers, and have well-documented processes for managing and protecting data.

Breaching the GLB Act can result in fines and—in some cases—criminal penalties. Financial institutions found at fault could face fines of up to $100,000 per violation.  

Data privacy legislation - state by state

The US is yet to enact a federal data privacy law like Europe’s GDPR, though several attempts have been made and federal agencies like the Federal Trade Commission enforce privacy rules. Instead, several state legislations work to protect customer data.  

As of June 2024, 18 states have enacted personal data protection laws that are either in effect or going into effect in the near future.  

To provide a brief overview, review this image produced by the International Association of Privacy Professionals (IAPP), accurate as at 10 June, 2024.

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Learn more: Check out our practical guide on GDPR vs. CCPA for more specific information about international privacy regulations and privacy challenges organizations face.

We won’t get into the nitty-gritty of each legislation in this guide. But all of the acts have a lot in common. The key is to employ solid principles across your organization that allow you to anticipate and overcome compliance challenges ahead of time.  

My state isn’t listed here. Do I still need to think about data privacy compliance?

In short, yes. While explicit data privacy laws and regulations may not currently exist in your state, that doesn’t mean they won’t in the future.  

In 2023, several other states introduced privacy bills waiting to be passed by the legislature, including but not limited to Illinois, Louisiana, Massachusetts, Oklahoma, Minnesota, Pennsylvania, New York, and Vermont.  

To be prepared for the future, you need to plan. By following the core principles of data privacy listed below, you’ll have everything you need to achieve compliance legislation proactively.  

The 10 core principles of data privacy compliance

Above all, we recommend using the GDPR as your guideline for achieving data privacy compliance. Most modern data privacy laws are at least partially inspired by this law.  

With that in mind, certain principles form the basis of all data privacy regulations. These are the ten core tenets that you need to keep in mind when implementing your strategy.  

1. Use and process data lawfully

To process, use, and leverage consumer data, you’ll need to have a good reason. You need to be able to demonstrate that processing data is necessary for a specific legal purpose, such as fulfilling a contract, meeting a legal framework, or because it’s in the public interest.  

2. Be transparent and fair

Your business will need to be fair and transparent with its communication. You must tell customers without misleading them how their data will be used in a simple, understandable way. And, of course, you need to use the data only as you specified. As well as ensuring compliance, this builds trust with consumers.  

3. Honor the right to access data

Under data privacy regulations, people have the right to request access to the personal data they hold. A request could be as simple as asking whether you have a name on record or as complex as asking which third parties you’ve sent data to. Either way, it’s best to have your documents organized so you’re always ready to give the right information.

4. Respect the right to rectify or erase data

Similarly, your customers have the right to correct inaccurate information or ‘opt out’ and request that you delete their data. In this case, you’ll need to respond to the request accurately and promptly. However, this depends on the particular law that your business is subject to, as some only have a right of access.

5. Adopt a ‘consent first’ approach

Putting consent at the forefront is the foundation of excellent compliance. You need to ensure that all customers provide a clear, informed agreement for you to process, store, and use their personal data.  

6. Place privacy at the forefront

Compliance with data privacy legislation is all about safeguarding. You need to be able to prove (often through well-defined documentation) that you have the right level of confidentiality and security measures to prevent data loss via cyber threats.  

7. Practice data minimization

Data minimization is about collecting the minimum amount of data you need from your customers to fulfill your purpose. You need to ensure you only process personal data for a purpose if there are no other ways to reasonably fulfill that purpose.  

8. Ensure data deletion

Of course, this also ties into data deletion. When personally identifiable information (PII) is no longer necessary, it must be destroyed. This involves setting clear retention periods and (to ensure transparency) making customers aware of that retention period.

Depending on the data you possess, you may also need to anonymize sensitive data that is no longer necessary. The anonymization should be irreversible so that no one can retrieve the information.  

9. Show accountability

Having robust data privacy measures is great, but you should be able to prove that you have all of the right security systems in place. This usually involves having clearly defined processes and protocols and keeping clear documentation of data throughout its lifecycle.  

10. Notify of data breaches

No one wants a breach to occur. But if you fail to prevent unauthorized access to your data, you must notify the relevant authority as soon as possible—often within 72 hours.

Implement a data privacy compliance strategy

Now that you understand the core principles required to comply with data privacy legislation let’s run through how to build a data compliance strategy step by step.  

Step 1: Start with data discovery

If you don’t know what data you possess and where it lies, you can’t be sure you’re keeping it safe.

Before you can build a compliance program, you need to develop a data map that catalogs where all of your data is and who can access it. Aside from ensuring your entire data inventory is safeguarded, this process also means you’ll have information readily accessible during data portability or access requests.  

Manual data processing and data classification takes a lot of time and makes you susceptible to human error. Our cloud data platform can automate the data discovery process, tagging and classifying your records no matter where they are.  

Read more: Find out more about our data privacy compliance solution.

Step 2: Understand the regulations that apply to you

Once you know your data, you need to understand what is required from you for compliance. While this guide provides an overview of several different data privacy regulations, we always recommend working with a specialist to learn which legislation you need to consider.

Of course, there may not be any regulation that applies to you. But, as we mentioned earlier, proactivity is the key to great compliance. We recommend following the GDPR framework to plan for the future.  

Step 3: Create a high-level compliance policy

Before you can get into the details, you need to start with the broad strokes. We recommend creating an overarching, clearly documented policy. These are the key principles that will act as the ‘corporate voice’ of your company. Everyone, from your key stakeholders to your employees, should know exactly what these procedures are and why they matter.

Step 4: Build robust measures for data security compliance

Ultimately, security measures are at the heart of data privacy compliance. You must prove you have the administrative and physical security measures to ensure confidentiality and data availability.  

Establish data access controls, encryption standards, data backup features, and continuous monitoring policies to safeguard sensitive information against security breaches. You should also ensure you have systems and procedures to detect unauthorized access to your data.  

Above all, you must assess and improve your security standards regularly. Threats are constantly evolving—proactivity will help you stay ahead of the curve.  

Step 5: Establish clear data privacy policies and procedures

Keeping data secure is one thing, but it’s equally important to have clear procedures for collecting, using, leveraging, and disposing of the information you possess.  

For example, you’ll want a clearly defined procedure for acquiring customer consent. You’ll also need protocols for access requests, data sharing, and when a customer wants to opt out.  

Similarly, to abide by data minimization requirements, you’ll must clearly define your data retention policies and how you anonymize, pseudonymize, archive, and securely dispose of records.  

Step 6: Construct an incident response plan

Create a comprehensive incident response plan and a disaster recovery document outlining how your security team will respond to a data breach, minimize damage, and ensure compliance.  

Step 7: Maintain data documentation consistently

Every step in your compliance framework must be accurately documented for compliance audits and legal issues. You may do this manually through tools like Microsoft SharePoint or by appointing a specific employee to manage compliance documentation.

Alternatively, a data management platform like RecordPoint can help make this process automatic. Our solution allows you to manage all of your records in one central place without moving a thing. This acts as a consistent source of truth across all your data stores, allowing you to prove compliance whenever required.

How RecordPoint can help with data privacy compliance

If you’re looking to improve your data privacy compliance strategy, RecordPoint’s cloud-native platform can help.  

The RecordPoint platform can automatically collect, tag, and classify your records based on their sensitivity. You can view and manage every data asset you possess in one central place. And, with support for over 900 applications, you don’t need to move a thing.

As RecordPoint automatically classifies data, it will inform you if any data is at risk, if you hold private data for too long, or when a record is reaching the end of its retention period. You can even set custom retention and disposition schedules to support data minimization.

With RecordPoint, you’ll always have the data you need to prove compliance during an audit, promptly respond to data transfer and access requests, and safeguard information, no matter where it lies.  

Learn more about our Data Privacy and Compliance features, or reach out today and book a demo to find out how we can help your business streamline regulatory compliance.