Have you ever thought about your business’s liabilities regarding data privacy? If not, you’re not alone. Many companies are unaware of the potential risks and liabilities associated with data privacy.
Data privacy is a complex and ever-changing issue, making it difficult for businesses to keep up with the latest developments. This lack of awareness can put companies at risk of costly lawsuits and regulatory penalties. That’s why it’s crucial to have a business lawyer on board who can advise you on data privacy issues and help you avoid liability.
Common Types of Data Privacy Liabilities
To help you better understand the risks and liabilities associated with data privacy, we’ve compiled a list of the most common types of liability. We’ve also included some tips on how businesses can protect themselves from these liabilities.
There are four main types of business data privacy liabilities:
- Regulatory Liability
- Contractual Liability
- Tortious Liability
- Criminal Liability
Regulatory Liability
Regulatory liability arises from laws and regulations that govern how businesses handle data. These laws vary from country to country, but they all have one thing in common: they impose fines or other penalties for non-compliance.
For example, in the European Union, the General Data Protection Regulation (GDPR) imposes heavy fines for companies that mishandle personal data. The GDPR applies to any company that processes or intends to process the personal data of EU citizens. That is regardless of whether the company is based inside or outside the EU.
The GDPR requires companies to take steps to protect the personal data of EU citizens. That includes ensuring that data is encrypted, ensuring that only authorized personnel have access to it and providing customers with a way to opt out of having their data collected.
Non-compliance with the GDPR can mean fines reaching 4% of a company’s global annual revenue or a minimum of €20 million.
The California Consumer Privacy Act (CCPA) imposes similar requirements on companies that process the personal data of Californians. The CCPA requires companies to provide customers with a way to opt out of having their data collected. It also gives them the right to know what personal information is being collected.
The CCPA imposes a fine of up to $2,500 for each violation, such as unauthorized access to customer data. It imposes a fine of $7,500 for each intentional violation, such as selling customer data without consent.
Contractual Liability
Contractual liability arises from agreements between businesses and their customers, suppliers, or other partners. These agreements typically state that the company will take steps to protect the customer’s data, such as encrypting it or ensuring that only authorized personnel have access to it.
If the business fails to live up to its obligations, the customer can sue for breach of contract. In some cases, the customer may be able to cancel the contract and get out of it without paying any penalties.
For instance, if hackers breach the company’s system and steal client information, the company would likely be in breach of its contract with the client. The client could then sue for damages or cancel the contract and get out of it without paying any penalties.
Tortious Liability
Tortious liability arises from businesses’ civil wrongs against individuals or other companies. These wrongs can be intentional (such as defamation) or accidental (such as negligence).
Individuals who suffer harm due to a business’s actions can sue for damages. In some cases, the court may order the company to pay punitive damages designed to punish the business and deter others from committing similar acts.
For example, if a business posts false information about a competitor on its website, the competitor could sue for defamation. If the business is found to have acted maliciously, the court could order it to pay punitive damages.
Criminal Liability
Criminal liability arises from laws that make it a crime to mishandle data. The penalties for violating these laws can be severe, including prison sentences and heavy fines.
In the United States, the federal Computer Fraud and Abuse Act (CFAA) criminalizes unauthorized access to a computer. The CFAA applies to any computer connected to the internet. That means that almost all businesses are covered by it.
Violating the CFAA can result in fines of up to $500,000 and imprisonment of 20 years.
The European Union’s General Data Protection Regulation (GDPR) also makes it a crime to
How Businesses Can Protect Themselves
Data privacy liabilities can come from many sources. Businesses need to be aware of the potential liabilities so that they can take steps to protect themselves. There are several ways that businesses can do that. Here are some common methods.
- Encrypting data: This makes it much more difficult for hackers to access and use the data.
- Restricting access to data: Only authorized personnel should have access to sensitive data.
- Providing customers with a way to opt-out of having their data collected: This gives customers more control over their personal information.
- Complying with laws and regulations: Businesses should make sure that they are in compliance with all relevant laws and regulations, such as the GDPR and the CCPA.
- Monitoring for security breaches: Businesses should regularly monitor their systems for security breaches.
- Creating a data privacy policy: A data privacy policy is a document that outlines how a business collects, uses, and protects data. Having a policy in place can help businesses to avoid liability.
Doing these things can help businesses avoid liability and keep their customers’ data safe. These are crucial tasks that any business must invest in.
