Data Education Center

What is the General Data Protection Regulation (GDPR)?

The General Data Protection Regulation (GDPR) represents a significant pivot towards strengthening and unifying data protection for all individuals within the European Union (EU). It also addresses the export of personal data outside the EU and EEA areas.

The GDPR aims to give control back to citizens and residents over their personal data while simplifying the regulatory environment for international business by unifying the regulation within the EU. Effective from May 25, 2018, it replaced the Data Protection Directive 95/46/ec as the primary law regulating how companies protect EU citizens' personal data.

Comprehensive Coverage

The GDPR is not limited to companies within the EU; it applies to any organization worldwide that deals with the data of EU citizens, emphasizing the global impact of the regulation.

Strict Penalties

Non-compliance can lead to hefty fines, up to €20 million or 4% of the annual global turnover, underscoring the importance of adhering to the regulation.

The Core of GDPR: 7 Essential Requirements

The GDPR is built around seven key principles that dictate how personal data should be processed. These principles are not just guidelines but are fundamental to GDPR compliance and ensure organizations approach data processing with the utmost responsibility and transparency.

1. Lawfulness, Fairness, and Transparency

Data must be processed lawfully, fairly, and in a transparent manner, ensuring individuals understand how their data is being used.

2. Purpose Limitation

Data collected for specified, explicit, and legitimate purposes cannot be processed in a way incompatible with those purposes.

3. Data Minimization

Organizations should only process data that is necessary for the intended purpose, emphasizing the principle of "less is more."

4. Accuracy

It's vital to keep personal data accurate and up to date, with every reasonable step taken to erase or rectify data that is inaccurate.

5. Storage Limitation

Personal data should be kept in a form that permits identification of data subjects for no longer than necessary for the purposes for which the personal data are processed.

6. Integrity and Confidentiality

Data must be processed in a way that ensures security, including protection against unauthorized or unlawful processing and against accidental loss, destruction, or damage.

7. Accountability

The data controller is responsible for and must be able to demonstrate compliance with all the other principles, highlighting the importance of internal policies and measures that ensure GDPR compliance.

Does GDPR Affect Your Business?

The GDPR's reach is not confined to the EU; it has a global impact. This wide-reaching effect ensures that virtually all companies that operate internationally need to be aware of and comply with GDPR requirements.

Material and Territorial Scope

GDPR applies to any organization that processes the personal data of EU residents, regardless of the company's location. This includes both automated and manual processing if the data is part of a filing system.

Compliance for Non-EU Businesses

If your business offers goods or services to EU residents or monitors their behavior, GDPR applies to you. This global reach means that virtually any business interacting with EU residents needs to understand and implement GDPR compliance strategies.

High Fines for Non-compliance

The regulation sets forth penalties for violations, with fines reaching up to €20 million or 4% of the annual worldwide turnover, making it crucial for businesses to invest in compliance efforts.

Understanding and implementing GDPR compliance can be daunting, but it's essential for organizations to protect the personal data of their users and avoid significant fines.

It emphasizes respect for user privacy in the digital age and ensures businesses take data protection seriously.

How Essential is GDPR Compliance for US-Based Companies Offering Services to EU Citizens?

The General Data Protection Regulation (GDPR), while a European Union initiative, has a significant impact on US businesses that handle the data of individuals residing in the EU. Its extraterritorial scope means that GDPR compliance is not limited by geography but by the data subject's location.

Whether you're a small business or a multinational corporation, if you process the personal data of EU residents, GDPR applies to you. This inclusion is critical for US businesses to understand and act upon to avoid hefty penalties and legal challenges.

Applicability to US Citizens and Businesses

The GDPR protects any data subject located in the EU, regardless of citizenship. Therefore, US citizens visiting or residing in the EU are covered under GDPR, and US businesses interacting with them must comply. This location-based rather than nationality-based approach broadens the GDPR's applicability, ensuring US companies must evaluate and possibly adjust their data handling practices​​.

For US companies aiming to comply with the GDPR, following a structured step-by-step approach can ensure thorough preparation and adherence to the regulation's requirements. Here's a breakdown based on the insights gathered:

1. Conduct a Privacy Audit:

   1. Identify all personal data you collect, including IP addresses, names, email addresses, and more.

   2. Include an assessment of cookies and trackers by using tools like website cookie scanners.

   3. This step, though not mandated by GDPR, lays the groundwork for compliance by clarifying the scope of data collection and processing activities.

2. Establish a Legal Basis for Data Processing:

   1. Review the types of data collected and determine the legal basis for processing each category, as specified in the GDPR.

   2. Common legal bases include consent from the data subject, contractual necessity, and legitimate interest.

   3. Inform data subjects about the legal basis for processing their data, typically through your privacy policy.

3. Create a GDPR-Compliant Privacy Policy:

   1. Draft and publish a privacy policy that is easily accessible and understandable to users.

   2. The policy should detail your data processing practices, including what data is collected, how it's used, and the rights of data subjects.

4. Obtain, Track, and Log User Consent:

   1. If relying on consent for data processing, implement mechanisms to obtain, track, and document consent choices.

   2. Utilize cookie banners and policies that allow users to opt-in or out of data tracking and processing, ensuring an option for users to withdraw consent at any time.

5. Implement Compliant Data Processing Agreements:

   1. When engaging third-party processors, ensure Data Processing Agreements (DPAs) are in place that comply with GDPR requirements.

   2. DPAs should detail the obligations of the processor, including data security measures and the rights of data controllers to audit compliance.

6. Adhere to Data Security and Storage Guidelines:

   1. Apply appropriate technical and organizational measures to secure personal data, including encryption and pseudonymization where feasible.

   2. Develop procedures to promptly restore access to data following a technical incident and regularly evaluate the effectiveness of security measures.

7. Manage International Data Transfers:

   1. Ensure that any transfer of data outside the EU complies with GDPR's stringent requirements on international data sharing.

   2. This may involve adopting standard contractual clauses or ensuring adequacy decisions are in place for the destination country.

By systematically addressing each of these steps, US businesses can better navigate the complexities of GDPR compliance, demonstrating a commitment to data privacy and protection that aligns with the regulation's standards.

Unpacking GDPR: 4 Pillars of Data Protection

The GDPR stands on four main pillars designed to ensure a high level of protection for personal data. These pillars emphasize the importance of lawful and transparent data processing, safeguarding data subjects' rights, and enforcing strict compliance measures.​

1. Lawfulness, Fairness, and Transparency:

   1. Lawfulness: Processing personal data must have a legal basis, such as consent, contract, legal obligation, vital interests, public task, or legitimate interests.

   2. Fairness: Processing must be fair to the data subject, meaning you must not process data in a way that is unduly detrimental, unexpected, or misleading to the individuals concerned.

   3. Transparency: Data subjects must be informed about how their data is being used, by whom, and for what purpose, in a clear and understandable way.
       

2. Purpose Limitation and Data Minimization:

   1. Purpose Limitation: Data collected must be for specific, explicit, and legitimate purposes and not further processed in a manner incompatible with those purposes.

   2. Data Minimization: Only data that is necessary for the purposes for which it is processed should be collected and stored.
       

3. Accuracy and Storage Limitation:

   1. Accuracy: Personal data must be accurate and, where necessary, kept up to date. Every reasonable step must be taken to ensure that inaccurate data, regarding the purposes for which they are processed, are erased or rectified without delay.

   2. Storage Limitation: Personal data should be kept in a form which permits identification of data subjects for no longer than is necessary for the purposes for which the personal data are processed.
       

4. Integrity and Confidentiality (Security) and Accountability:

   1. Integrity and Confidentiality: Personal data must be processed in a manner that ensures appropriate security of the personal data, including protection against unauthorized or unlawful processing and against accidental loss, destruction, or damage, using appropriate technical or organizational measures.

   2. Accountability: The data controller is responsible for, and must be able to demonstrate compliance with, all the principles mentioned above.

These pillars form the backbone of GDPR, ensuring that the privacy and protection of personal data are prioritized and maintained throughout data handling processes. Each pillar is crucial for achieving GDPR compliance and requires a thoughtful approach to how personal data is collected, stored, and used.

Rights Under GDPR

The General Data Protection Regulation (GDPR) grants individuals several rights concerning their personal data, ensuring they have more control and protection. These rights are explicitly detailed in various articles within the GDPR:

1. Right to Be Informed (GDPR Article 13 & 14): Individuals have the right to be informed about the collection and use of their personal data. This transparency is fundamental to building trust between data subjects and entities that process their information.

2. Right of Access (GDPR Article 15): Data subjects can request access to their personal data. They can obtain a copy of the personal data held about them, enabling them to verify the lawfulness of the processing.

3. Right to Rectification (GDPR Article 16): If personal data is inaccurate or incomplete, individuals have the right to have it corrected. This ensures that organizations do not process and make decisions based on incorrect information.

4. Right to Erasure (Right to be Forgotten) (GDPR Article 17): Under certain conditions, individuals can demand the deletion or removal of personal data where there is no compelling reason for its continued processing.

5. Right to Restrict Processing (GDPR Article 18): This right allows individuals to block or suppress the processing of their personal data under specific circumstances.

6. Right to Data Portability (GDPR Article 20): Data subjects have the right to obtain and reuse their personal data across different services. This enables them to transfer their data from one IT environment to another safely and securely.

7. Right to Object (GDPR Article 21): Individuals have the right to object to the processing of their personal data in certain circumstances, including for direct marketing, research, or statistical purposes.

8. Right to be Notified (GDPR Article 34): In the event of a data breach that is likely to result in a risk to the rights and freedoms of individuals, data subjects have the right to be notified without undue delay.

These rights are designed to ensure data privacy and protection, empowering individuals with greater control over their personal data. Organizations must comply with these rights to maintain transparency, foster trust, and avoid potential fines for non-compliance.

The Financial Impact of Data Breaches

Data breaches can have severe financial implications for organizations, not only in terms of potential GDPR fines but also regarding reputational damage and loss of customer trust. Non-compliance with GDPR can result in penalties up to €20,000,000 or 4% of the previous year's worldwide turnover, whichever is greater.

The financial repercussions of GDPR non-compliance have been a wake-up call for companies worldwide. In 2023, Meta faced a historic fine exceeding €1.2 billion for inadequate data protection mechanisms during the transfer of personal data to the United States.

This fine alone nearly matched the combined total of all GDPR fines up until January 2022, which stood at approximately €1.64 billion, underlining the escalating consequences of non-compliance.

Amazon was also fined €746 million by Luxembourg's National Commission for Data Protection due to consent issues in its advertising targeting system. These cases highlight the critical need for stringent data protection measures and the high cost of non-compliance​​​​.

Achieving GDPR Compliance 

IRI offers comprehensive compliance software to help organizations address the stringent requirements of the GDPR. These tools focus on data discovery, protection, masking, and compliance verification, ensuring companies can manage personal data effectively across multiple formats and systems.

1. Data Discovery and Masking

   1. IRI FieldShield, DarkShield, and CellShield tools provide essential data discovery and masking capabilities. They help organizations locate sensitive PII across structured, semi-structured and unstructured databases and files (including images and documents) and apply techniques like pseudonymization, encryption, redaction, blurring or scrambling to secure PII and PI.

2. Role-Based Access Control (RBAC)

   1. Through RBAC, IRI ensures that only authorized personnel access sensitive data. This minimizes the risk of breaches by restricting access based on job roles, maintaining GDPR compliance by controlling who can see or modify data.

3. Right to Be Forgotten & Data Portability

   1. IRI tools simplify compliance with these key GDPR rights by enabling efficient search, deletion, and extraction of personal data. They can also provide data in standardized formats for portability.

4. Integrated Data Governance with Voracity

   1. The IRI Voracity platform combines data integration, governance, and masking into a centralized framework. It automates processes like ETL (Extract, Transform, Load) to check consent status, cleanse outdated data, and unify disparate sources for analytics — all while maintaining compliance with GDPR and other data privacy laws.

5. Audit Trails & Risk Scoring

   1. IRI provides detailed audit logs and metadata lineage tracking to demonstrate compliance to regulators. Its re-identification risk scoring feature ensures anonymized demographic data remains compliant, too.

6. Safe Test Data Generation

   1. Instead of using production data for testing, RowGen generates realistic, referentially-correct test data, helping organizations meet GDPR requirements while maintaining operational accuracy and reducing risk.

IRI’s solutions enable organizations to meet GDPR demands proactively, protecting their reputations and avoiding costly penalties. The modular nature of IRI’s tools ensures that companies can implement exactly what they need, from discovery and masking to auditing and reporting.

IRI also partners with GDPR Local to help companies in Europe document and protect EU citizen data.

Visit the IRI GDPR Compliance Toolkit to learn more or email info@iri.com for customized support.

Sources

• https://www.nytimes.com/2023/05/22/business/meta-facebook-eu-privacy-fine.html
• https://termly.io/resources/articles/gdpr-in-the-us/
• https://gdpr.eu/what-is-gdpr/
• https://www.cloudflare.com/learning/privacy/what-is-the-gdpr/
• https://www.iri.com/solutions/data-masking/gdpr
• https://www.iri.com/resourceViewer/pdf/presentations/gdpr/IRI_GDPR_Compliance_Toolkit