Effective 25 May 2018, the EU's General Data Protection Regulation goes into effect. The GDPR is a big deal and quite complicated. There are 99 articles and 173 recitals defining the privacy rights of individuals and data controllers’ and data processors’ obligations.
Are you a U.S.-based data controller or data processor subject to the GDPR? You are a “data controller” if you, alone or jointly with others, determine the purpose and means of “processing” personal data of EU individual customers or businesses. The threshold is that you offer goods or services to customers or businesses in the EU (including the UK, despite Brexit) and collect their personal data. But even if you don’t sell goods or services to EU customers but engage in marketing or monitoring activities involving EU individuals’ personal data, you are covered by the GDPR.
You are a data processor if you “process” personal data on behalf of a “data controller,” i.e., a data controller contracts with you to process personal data that the controller collects from individuals. “Process” or “processing” means any operation or set of operations that are performed on personal data or on sets of personal data, whether or not by automated means, such as data collection, recording, organization, structuring, storage, adaptation or alteration, retrieval, consultation, use, disclosure by transmission, dissemination or otherwise making available, alignment or combination, restriction, erasure or destruction.
Personal data includes one or more of the following: IP addresses, names, birth dates, physical addresses, email addresses, customer photos, billing information, customer identification numbers, any other information that can be used alone or with other data to identify a person, and sensitive data such as genetic data and biometric data that could be processed to uniquely identify an individual.
Perhaps you're already in compliance with the GDPR. It's been in the works for the last two years. But if not, read on:
For compliance purposes, you should consider giving priority to the following:
- Updating your customer-facing websites and mobile app privacy policies to comply with the GDPR. These existing policies may be deficient in the following areas:
- provide that the customer has the right to have inaccurate personal data rectified;
- explain that the customer has the right to have their personal data deleted, i.e., the “right to be forgotten;”
- explain that the customer has the right to receive their personal data;
- explain that the customer has the right to object or restrict the processing of their data;
- explain that the customer has the right to at any time revoke its consent to the processing of their data;
- explain that the customer has the right to the secure storage and transfer of their data; and
- explain that the customer has the right to have their outdated data erased.
- If you are a data controller, make sure that you have suitable contracts with your data processors, and data processors should do the same with their data controllers. The GDPR includes specific content requirements for these contracts.
- If you have or process personal data, you should consider having Cyber Risk Liability insurance that may respond to penalties resulting from non-compliance with the GDPR. Cyber Risk policies have become more affordable in recent years, but you must carefully review the exclusions because fines or penalties levied by government authorities may be excluded from coverage.
- You should also consider having Directors and Officers Liability insurance because a company’s failure to properly secure personal data or timely report data breaches may lead to D&O liability to shareholders or outside parties. Again, you should carefully review the coverage exclusions.
Penalties for non-compliance with the GDPR are stiff: up to four percent of the violating data controller’s global annual revenue per violation or $20 million Euros – whichever is greater. Also, the data controller (and its data processor if any) may be prohibited from processing EU customers' personal data.
I've prepared questionnaires for data controllers and data processors to help determine if they are subject to the GDPR. If you would like a copy (at no charge), email me!