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The General Data Protection Regulation (GDPR) is a landmark law for consumer privacy and data security. It was officially drafted in 2018 in the European Union. For enterprises in Germany, complying with the GDPR affects many aspects of business operations, from billing to marketing. Is it necessary for your company to have GDPR compliance in the US?
A common misconception is that the GDPR only applies to companies that are physically based in Europe or officially registered in one of the EU countries. In reality, the GDPR doesn’t consider where your business is located but where your customers live. It’s designed to protect the personal data of temporary or permanent EU residents and citizens.
Broadly speaking, this means that any U.S. businesses with customers in the EU must comply with GDPR standards for data security and privacy. More specifically, you must follow GDPR rules if you gather any type of personal data on EU residents, such as first and last names, ID numbers, biometric data, location data, payment card information, and similar identifying characteristics.
If your organization has any business locations in the EU, GDPR compliance is obligatory, regardless of activities. GDPR rules apply to businesses that process the data of EU residents even if the company doesn’t sell products in the EU. For example, a U.S.-based real estate brokerage helping clients connect with property owners in France or Ireland would need to follow GDPR when collecting or sharing owner information.
The U.S. does not require businesses to implement the GDPR framework, and no federal law comprehensively outlines consumer privacy protections. GDPR compliance can be useful if you plan on expanding to European markets, but it’s not obligatory.
Some U.S. businesses must implement other mandatory data security or privacy standards. Healthcare organizations must follow HIPAA and HITRUST laws, and e-commerce businesses have to respect the Children’s Online Privacy Protection Act.
Many states are starting to implement user privacy requirements. For example, the California Consumer Privacy Act gives the state’s residents the right to view and opt out of data collection. Virginia and Colorado also have robust data privacy rights. Even when GDPR compliance isn’t mandatory, understanding and implementing the security and privacy principles in the GDPR framework can help you future-proof your operations.
One question that e-commerce businesses and online stores often ask is how to handle GDPR compliance with international customers. Thanks to the internet, even websites from small towns in Utah can receive visitors from around the world.
Do GDPR U.S. compliance rules kick in automatically because shoppers from France or Italy browse your store or buy a few products? Not necessarily. The answer depends on a few factors:
E-commerce store owners don’t usually have control over where products are shipped or where users visit from, so there’s no need to check your website traffic for signs of EU visitors.
Even offering your site in French, Spanish, or other languages doesn’t mean you have to automatically comply with GDPR; many U.S. cities have diverse populations. However, when you offer products in different currencies or market to international audiences, GDPR compliance becomes necessary.
According to a recent report, more than 50% of U.S. businesses are seriously considering expanding globally. The examples in this article mainly involve retailers, but the number of U.S. industries that do business in Europe is far greater:
GDPR compliance can be a small price to pay for expanding into a market of nearly 450 million people with open trade borders and a €17 trillion GDP. Overall, the U.S. is the largest trading partner with the EU.
If your company’s base of operations is in the U.S., it can seem tempting to simply ignore GDPR requirements when dealing with EU customers. After all, how can courts in the EU enforce judgments against businesses on the other side of the world?
Ignoring GDPR is a bad idea for several reasons. First, you risk significant fines. Uber, Meta, Marriot, and Amazon are just a few companies to face fines of up to €1.2 billion for GDPR violations. EU member states don’t have jurisdiction in the U.S., but court decisions apply through mutual assistance treaties.
Second, consumers in the EU and UK expect businesses to respect their data privacy rights. Non-compliance can damage a company’s reputation, negating the reason for expanding your business in the first place.
The GDPR restricts how and when businesses can process personal data that belongs to data subjects in the EU. Any of your organization’s data processing activities — collecting, using, organizing, analyzing, storing, or deleting — are subject to privacy and security standards under GDPR.
One of the strongest consumer privacy protections in the GDPR is the principle of unambiguous user consent. In the majority of situations, you can only legally collect and process personal data in the EU — even internet cookies — after explaining exactly how you plan on using the information and getting affirmative consent.
Data subjects have many privacy rights under GDPR, including:
Make sure your privacy policy aligns with these rights. Lay out processing specifics clearly and explain how data subjects can take advantage of their rights.
For U.S. businesses, GDPR compliance means ensuring their IT infrastructure supports the necessary portals for information access, consent forms, and channels for erasure requests.
Not all controllers or third-party processors need to appoint a Data Protection Officer, but ones that regularly process a large volume of personal data do, like social media companies, mobile app developers, and advertising businesses that specialize in tracking user behavior. Companies that process special data (e.g., healthcare organizations) also need a DPO.
Companies that process special data categories, including biometric, racial, and health information, may need to name a representative in the EU. Insurance companies, tech companies, and employers with a sizable workforce in the EU may be in this category. Representatives must be located in the EU and have the responsibility of coordinating GDPR compliance.
GDPR has a very short window for data breach notifications: just 72 hours. Your organization must also have a breach response plan outlining mitigation strategies.
It’s not just data collection and processing that the GDPR watches over. Any transferring of EU-based personal data to other countries must comply with strict controls, too. That means that U.S. websites have to carefully check every step in the pipeline for GDPR compliance, including ISPs and third-party data processing software.
You usually need to have a signed Standard Contractual Clause and Data Processing Agreement for each third-party entity or you can enroll in the EU-U.S. Data Privacy Framework program with self-certification.
Complying with GDPR in the U.S. requires time and effort, but it’s not exceptionally complicated. The following steps are a good place to start:
What your employees do can affect your company’s GDPR compliance. Ensure your device policies have clear examples of and penalties for unauthorized access or disclosure of personal data. The same goes for any third-party data processors, including cloud storage providers or advertising partners.
Organizations that process a large volume of personal data should work with a GDPR specialist to create a detailed roadmap for EU operations. As an automated compliance platform, Compyl can help you simplify the process of identifying your GDPR scope, implementing protections, and verifying compliance. See the benefits of Compyl for GDPR compliance in the U.S. today.
