The General Data Protection Regulation (GDPR) is a regulation enacted by the European Union to protect EU citizens' privacy and personal data. It came into effect on May 25, 2018, and applies to all companies that process the personal data of people living in the EU, even if the company is not located within the EU.
The regulation provides EU citizens with more control over their personal data and simplifies the regulatory environment for international businesses by unifying the regulation within the EU. Non-compliance with the GDPR can result in hefty fines.
Why Is GDPR Compliance Important?
GDPR compliance is critical for several reasons:
- Legal Requirements: The GDPR is legally binding on all organizations handling data of EU citizens, regardless of where they are based. Failure to comply can result in hefty fines and penalties.
- Trust and Reputation: Compliance with GDPR sends a positive signal to consumers and partners about the company's commitment to data privacy and security, thereby building trust and enhancing the organization's reputation.
- Data Breaches: GDPR consists of guidelines for data handling and breach notifications. Compliance with these can reduce the likelihood of a breach and its potential damage.
- Privacy by Design: GDPR emphasizes considering data privacy during system designs, promoting privacy and data compliance protection from the onset instead of an addition.
- Competitive Advantage: Demonstrating GDPR compliance can provide an edge over competitors that do not provide their customers the same level of data protection.
- Improved Data Governance: Complying with GDPR can help an organization understand and catalog its data, which can lead to better decision-making.
- Financial Penalties: GDPR violations can result in huge fines (up to €20 million or 4% of annual global turnover, whichever is higher).
- Global Business Dealings: GDPR compliance is essential for any organization intending to conduct business in the EU or with EU-based organizations.
The Principles of GDPR
The principles of the General Data Protection Regulation (GDPR) outline the key obligations of organizations for collecting, processing, and storing personal data. The seven principles are:
- Lawfulness, Fairness, and Transparency: Personal data should be processed lawfully, fairly, and transparently regarding the data subject.
- Purpose Limitation: Personal data should be collected for specified, explicit, and legitimate purposes and not further processed in a manner that's incompatible with those purposes.
- Data Minimization: Personal data should be adequate, relevant, and restricted to what's necessary to accomplish the purposes for which they're processed.
- Accuracy: Personal data should be accurate and, where necessary, kept up to date. Reasonable efforts should be taken to correct or delete inaccurate data without delay.
- Storage Limitation: Personal data should be kept in a form that allows the identification of data subjects for no longer than necessary for processing purposes.
- Integrity and Confidentiality: Personal data should be processed to ensure appropriate security, including protection against unauthorized or unlawful processing, accidental loss, destruction, or damage. This principle calls for the use of proper technical or organizational measures.
- Accountability: The data controller is responsible for and must demonstrate compliance with the other six principles. This means that businesses need to have proper measures and records in place to demonstrate their compliance.
Who Is Subject to GDPR Compliance?
- Any organization, irrespective of its location, which processes the personal data of individuals residing in the EU.
- Both for-profit and not-for-profit organizations, regardless of their size.
- All sectors and industries that process personal data.
- Data controllers and data processors. A data controller is an organization that determines the purposes and means of processing personal data. In contrast, a data processor is an organization that processes the data on behalf of the controller.
- Organizations based outside the EU, if they offer goods or services to, or monitor the behavior of, EU data subjects.
- Organizations that process special categories of data on a large scale or collect data relating to criminal convictions and offenses.
GDPR Data Subject Rights
The GDPR outlines several key rights for individuals, known as data subjects. These include:
- Right to be informed: Individuals have the right to know how their data is being used. This must be communicated clearly at the time of data collection.
- Right of access: Individuals have the right to access their personal data and information about how this data is being processed.
- Right to rectification: Individuals have the right to correct any inaccurate personal data held about them.
- Right to erasure (also known as the right to be forgotten): In certain circumstances, an individual can request the deletion or removal of personal data.
- Right to restrict processing: Individuals can limit how organizations use their personal data.
- Right to data portability: Individuals can request and receive their personal data for their own use or to transfer it to another organization.
- Right to object: Individuals can object to the processing of their personal data, including for direct marketing, research, or statistics purposes.
- Rights related to automated decision-making and profiling: Individuals have the right not to be subject to a decision based exclusively on automated processing, including profiling, if this would have a legal effect on them or would significantly affect them.
What Are GDPR Compliance Requirements?
The General Data Protection Regulation (GDPR) requires businesses and organizations that process personal data from European Union (EU) residents to comply with certain standards.
Here are the key GDPR compliance requirements:
- Lawful, fair, and transparent processing: Organizations must process personal data lawfully, fairly, and transparently. This means informing individuals about who is collecting their data, what it will be used for, the legal basis for processing, and how long it will be stored.
- Consent: In most situations, organizations must obtain clear and affirmative consent from individuals to collect, use, or process their personal data. This consent must be freely given, specific, informed, and unambiguous.
- Data Minimization: Organizations should only collect personal data necessary for its intended purpose but shouldn’t keep it for longer than necessary.
- Accuracy: Personal data must be accurate and up to date. Any inaccurate data should be corrected or deleted.
- Storage Limitation: Data shouldn’t be kept longer than necessary for the purposes for which it was collected.
- Data Protection: Organizations must implement appropriate security measures to protect personal data from being lost, altered, or disclosed.
- Accountability: Organizations must demonstrate their compliance with GDPR principles by implementing proper data governance and record-keeping practices.
- Right to be forgotten: In certain situations, individuals have the right to request the erasure of their personal data.
- Data Protection Impact Assessments (DPIAs): Organizations must conduct DPIAs for processing operations likely to result in high risk to individuals’ rights and freedoms.
- Data Protection Officer (DPO): A DPO must be appointed if the organization processes large amounts of special category data or regularly and systematically monitors individuals.
- Reporting data breaches: Any data breaches likely to result in risk to individuals’ rights and freedoms must be reported to the relevant supervisory authority within 72 hours.
- Cross-border data transfers: Organizations that transfer personal data outside the EU must meet extra requirements and have appropriate safeguards in place to protect this data.
The Importance (and Misconceptions) of Consent in GDPR Compliance
An important pillar of GDPR compliance is consent. Incidentally, one of the easiest ways to avoid GDPR penalties is to always obtain individual users' consent before collecting or using their personal data. However, the main caveat is that consent must be freely given, be explicit, with clear affirmative action, and without the subject being cornered into doing so.
However, an abiding misconception is that GDPR requires consent before an organization can collect its users' personal data. On the contrary, as outlined in Article 6, a business only needs to identify the legal basis or operate in “compliance with a legal obligation” to process personal data.
For children below the age of 16, GDPR requires the business to obtain consent from whoever holds their parental rights.
GDPR also mandates that organizations handling data of European Union residents appoint a Data Protection Officer who is responsible for monitoring GDPR compliance.
How Does An Organization Become GDPR Compliant?
Becoming GDPR compliant can be a complex process, but here are some steps your organization needs to follow:
- Understanding GDPR: To get a solid understanding of the GDPR regulations, consider hiring a Data Protection Officer or consultant who specializes in GDPR.
- Audit Your Data: Identify what personal data your organization handles, where it comes from, and how it is processed. Document the nature and purpose of the data processing, details of the data subjects, and the categories of data being processed.
- Legal Basis for Processing: Define the legal basis for your data processing activities, such as consent from data subjects, contract necessity, legal obligation, or the organization's legitimate interest.
- Privacy Policy and Consent: Update your organization's privacy policies to ensure they are clear, transparent, and aligned with GDPR guidelines. Obtain clear and explicit consent from customers to process their data.
- Data Subject Rights: Establish procedures to honor the rights of data subjects, including data access, correction, deletion, portability, restriction of processing, and the right to object.
- Data Protection: Implement appropriate organizational and technical measures to protect personal data. These could include pseudonymization, encryption, incident response plans, and regular testing.
- Data Protection by Design and Default: Privacy should be an integral part of system designs. Limit the amount of data collected, the extent of their processing, and their storage period.
- Data Processing Agreement: If you use third-party vendors that process personal data on your behalf, make sure you have written agreements in place.
- Data Breach Notification: Develop a robust procedure to detect, report, and investigate a data breach. You have 72 hours to report a security breach incident to both the affected individuals and the relevant authority.
- Training: Regularly train all staff members handling personal data, ensuring they understand the importance of protecting customer data and the procedures they must follow.
- International Transfers: If data is transferred outside the EU, ensure you meet strict GDPR requirements.
The Fines and Penalties for Non-compliance with GDPR
The penalties for non-compliance of GDPR can be severe, based on the nature of the violation. There are two tiers of administrative fines:
1. Up to €10 million, or 2% of the worldwide annual revenue of the prior financial year, whichever is higher, if the company violated obligations related to:
- Technical and organizational measures of data processing.
- Record keeping and cooperation with the supervising authorities.
- Data security, notification, and communication regarding data breaches.
- Data protection and impact assessments.
- Data protection by design and default.
- Transfers related to appropriate safeguards and binding corporate rules.
2. Up to €20 million, or 4% of the worldwide annual revenue of the prior financial year, whichever is higher, if the company violated obligations related to:
- Basic principles for processing, including conditions for consent, and data subject's rights.
- The transfer of personal data to recipients in third countries or international organizations.
- Non-compliance with an order or a temporary or definitive limitation on processing or the suspension of data flows by the supervisory authority
The severity of the violation determines the ultimate amount of the fine and is at the discretion of the individual supervisory authorities.
Beyond fines, organizations can also face reputational damage due to negative publicity losing customer trust, driving business losses that could far exceed the fines levied by the supervisory authority.
How Digital Guardian Can Help With Your GDPR Compliance
Becoming GDPR-compliant is not a one-time effort. It requires ongoing commitment and regular reviews to ensure your organization stays compliant.
Digital Guardian boasts a suite of applications, including data loss prevention (DLP) to help foster data compliance and data governance, including data discovery, data visibility, and data classification mechanisms.
To learn more, schedule a demo with us today.
