Understanding GDPR Compliance for SMBs with International Customers
In today's global marketplace, small to medium-sized businesses (SMBs) increasingly serve customers from around the world. If your business handles data from European Union (EU) and United Kingdom of Great Britain (UK) customers, you must comply with the General Data Protection Regulation (GDPR) and the UK GDPR, which took effect after Brexit in 2020. GDPR is a comprehensive data protection law that governs how businesses collect, process, store, and protect personal data. Non-compliance can result in hefty fines, so it’s crucial to understand and implement GDPR requirements, even if you’re not based in the EU.
This blog breaks down each section of GDPR into easy-to-understand language, followed by a how-to guide specifically designed for SMBs that may not have robust legal or security teams.
What Is GDPR?
The General Data Protection Regulation (GDPR) is a law passed by the European Union in 2016, which took effect in May 2018. The UK equivalent took effect in January 2020 and is a version of the GDPR tailored to UK citizens’ privacy as a result of Brexit. For the purposes of this blog, we will refer to both collectively as “GDPR.”
The GDPR regulation is designed to protect the privacy and personal data of EU and UK citizens, giving them more control over how their data is used. GDPR applies to any business that processes the personal data of individuals in those geographical regions, regardless of where the business is located.
Key Sections of GDPR and How to Comply
1. Lawful Basis for Processing Data
Under GDPR, companies must have a lawful reason for processing personal data. There are six lawful bases, including consent, contract, legal obligation, vital interests, public task, and legitimate interests.
How to Comply:
Determine Your Lawful Basis: Identify the lawful basis for processing each type of personal data your business handles. For example, if you’re collecting data to fulfill a purchase order, your lawful basis could be “contract.” Another example is when a customer ‘opts in’ to receive customer marketing communications by providing your company their email address.
Document the Basis: Keep records of the lawful basis for each data processing activity. This documentation is crucial for demonstrating compliance and will be required if a regulatory body receives complaints from consumers about your company’s GDPR compliance.
2. Consent
If you rely on consent as your lawful basis, GDPR requires that consent must be freely given, specific, informed, and unambiguous. Individuals must actively opt in, and they must be able to withdraw consent easily (e.g., by an ‘unsubscribe’ button that immediately removes them from mailing lists).
How to Comply:
Obtain Clear Consent: Use clear, plain language to explain what data you’re collecting, why, and how it will be used. Ensure that consent forms are easy to understand and include an option to opt-out. Examples of companies that were fined under GDPR for not meeting this requirement are Google (France) in 2019 and H&M (Germany) in 2020.
Keep Records of Consent: Document when and how you obtained consent from individuals, and keep records of these consents.
Provide Opt-Out Options: Allow individuals to easily withdraw consent at any time, and make sure your systems are updated to reflect their preferences. Examples of companies that were fined for not meeting this requirement are Spamhaus (UK) in 2020 and Slam Corp (USA) in 2020.
3. Data Subject Rights
The GDPR gives individuals (data subjects) several rights regarding their personal data, including the right to access, rectify, erase, restrict processing, data portability, and object to processing.
How to Comply:
Implement Access Procedures: Set up a process that allows individuals to request access to their data. You must respond within 30 days. In 2019, Google LLC, headquartered in the US, was fined 50m Euros by CNIL (France regulator) for failing to provide data subject’s with clear and easily accessible information about how their personal data was being processed and used for targeted advertising.
Allow Data Correction and Deletion: Enable individuals to correct or delete their data upon request. Make sure this process is straightforward.
Provide Data Portability: If requested, provide individuals with their data in a structured, commonly used format that they can take to another service provider.
4. Accountability and Governance
GDPR requires businesses to demonstrate that they are accountable for complying with the regulation. This includes keeping detailed records, conducting data protection impact assessments (DPIAs), and appointing a Data Protection Officer (DPO), if necessary.
How to Comply:
Document Your Compliance Efforts: Keep thorough records of how you process data, your lawful bases, and your data protection measures. Examples for complying with this requirement are":
Implementing a clear data retention policy helps comply with GDPR’s data minimization and storage limitation principles (Article 5).
Having a well-defined breach/incident response plan is crucial for meeting the GDPR requirements for timely breach notification and documentation (Articles 33 and 34).
Regular employee training ensures that the company’s employees are aware of their responsibilities under GDPR, supporting the company’s accountability obligations (Article 39).
Regular audits, whether internal or external, demonstrate the company’s ongoing commitment to accountability and governance under GDPR (Recital 82).
Data Processing Agreements (DPAs) are required under GDPR to ensure that data processors comply with the same data protection standards as the data controller and are usually addendums to Master Service Agreements (MSAs) (Article 28).
Conduct DPIAs: If you’re processing data that could result in high risks to individuals (e.g., large-scale processing or sensitive data), conduct a DPIA to assess and mitigate risks.
This process helps the company comply with the GDPR requirement to conduct DPIAs when processing activities are likely to result in high risks to data subjects (Article 35)
Appoint a DPO if Required: If your core activities involve large-scale monitoring or processing of sensitive data, appoint a Data Protection Officer. For most SMBs, this may not be required, but it’s essential to assess this need.
This satisfies GDPR’s requirement for organizations that process large amounts of sensitive data or conduct large-scale monitoring to appoint a DPO (Article 37).
5. Security of Processing
The GDPR mandates that personal data must be processed securely. This means implementing appropriate technical and organizational measures to protect data from unauthorized access, alteration, or deletion.
How to Comply:
Encrypt Sensitive Data: Use encryption to protect personal data, both at rest and in transit.
This practice aligns with the GDPR’s requirement to implement appropriate security measures to protect data (Article 32, Recital 83).
Limit Access: Restrict access to personal data to only those employees who need it to perform their jobs.
This measure supports the GDPR’s focus on ensuring data confidentiality and integrity (Article 32, Recital 39)
Regularly Test Security Measures: Implement regular security testing and audits to ensure your measures are effective.
Regular audits help ensure ongoing compliance with GDPR’s security requirements, demonstrating a proactive approach to protecting personal data (Article 32, Recital 83).
Data Minimization and Pseudonymization
Data minimization and pseudonymization reduce the risk of data breaches and align with GDPR’s principles of data protection by design and default (Article 25, Article 32, Recital 78, Recital 28). Check out our resource on how to establish a DevSecOps function to implement a Secure by Design philosophy: https://www.kaylawilliamsconsulting.com/cyber-insights/how-to-establish-devsecops-team.
Data Backup and Recovery Solutions
This practice aligns with GDPR’s requirements for ensuring the availability and resilience of processing systems and services (Article 32, Recital 83).
Third-party Vendor Risk Management
Managing third-party risks and ensuring that data processors meet GDPR’s security standards is essential for compliance (Article 28, Article 32, Recital 81).
6. Data Breach Notification
If a data breach occurs that could result in a risk to individuals' rights and freedoms, you must notify the relevant Data Protection Authority (DPA) within 72 hours. In some cases, you must also inform the affected individuals. In most cases it is best to have General Counsel, whether internal or external, declare a breach - not all security incidents are breaches.
How to Comply:
Establish an Incident/Breach Response Plan: Develop a clear plan for identifying, reporting, and responding to data breaches. Ensure your team knows the procedures and conduct mock incident/breach scenarios to test the ability of teams to follow the plan and respond quickly and appropriately.
This practice ensures compliance with GDPR’s breach notification requirements (Article 33, Article 34, Recital 85).
Train Employees: Regularly train employees on how to recognize and report data breaches.
Training employees on data protection practices is essential for complying with GDPR’s organizational measures for security (Article 32, Recital 78).
