Compliance with data protection regulations can be a challenging endeavor for startups that specialize in digital products or services, which should begin by familiarizing themselves with legal requirements.
Intermediaries and startup interviewees described an active market for products that help companies comply with data protection regulations while overcoming any associated hurdles; however, end users typically did not regard privacy-friendly features as competitive differentiators.
Legal Requirements
Startups that are either in development phase or ready to release a product should establish data protection compliance from day one, both as a matter of trust with customers and as a competitive advantage against larger tech firms with poor track records.
Privacy laws vary across the globe and startups must remain agile and informed to adhere to various requirements. For instance, compliance with European General Data Protection Regulation (GDPR) and California Consumer Privacy Act (CCPA) requires startups to provide users with clear information on how their data is being used by businesses. Furthermore, certain countries impose stringent data localization laws mandating that data be stored locally.
A DPO can assist with these challenges by conducting regular risk analyses and assuring compliance with applicable law in company processes. Furthermore, DPOs can facilitate training and awareness efforts as well as manage processes for handling access requests, rectificing, and erasing personal data. They may even assist with cross-border data transfers by exploring mechanisms like Binding Corporate Rules (BCRs) or seeking an Adequacy Decision from the European Commission.
Data Protection Impact Assessments (DPIAs)
A DPIA (Data Privacy Impact Analysis) is an evaluation designed to assess the risks posed by processing personal data. The aim is to reduce these risks, which could range from financial to physical harm. A DPIA should be completed prior to starting any project that requires processing personal data, while publishing it can foster trust within your business and demonstrate accountability.
Not a requirement, but showing you are taking your responsibilities seriously and caring about individual privacy can demonstrate this commitment, raising awareness in your organisation of these important issues.
DPIAs can help identify potential risks while also helping to circumvent legal complications. GDPR requires businesses conducting DPIAs before initiating any process that uses large amounts of personal data, while Colorado and Virginia laws have similar provisions requiring such assessments for processes that pose “higher risks” of harm to consumers.
Data Protection Officers (DPOs)
DPOs must possess extensive knowledge of data protection laws and best practices. In order to carry out their tasks without interference from other members of staff, and report directly to the highest management level (ideally the board of directors).
Companies should appoint Data Protection Officers (DPOs) when their core activities include large-scale processing of personal data or systematic monitoring of individuals on an ongoing basis, or they handle sensitive categories of information pertaining to criminal convictions and offences.
Downie believes DPOs must act as liaisons between IT and marketing, bridging the divide between IT systems and marketing campaigns. Their knowledge must cover technical, security, legal, regulatory and customer aspects in order to comply with data protection regulations; additionally they should have the skills needed to build relationships with external stakeholders as well as conduct IT systems audits, facilitate risk analyses and prepare training materials in addition to providing assistance with data breaches investigations or complaints.
Privacy Policies
Not only can data insecurity impose financial costs on startups, but security incidents can cause customers or investors to withdraw. Furthermore, such events can damage reputation and make it hard for newcomers to compete with more established brands.
Privacy policies are essential for online startups as they provide clarity around why personal data is collected and its intended usage. Furthermore, startups should disclose any third parties with whom they share personal information.
Startups should establish clear data processing agreements with any contractors or service providers they work with to ensure full compliance with GDPR, CCPA and other privacy laws. Finally, startups must monitor access to data to quickly detect any breaches so as to prevent unauthorized access and protect customers against cyber attacks while protecting intellectual property against theft and misuse.
