After years of data breaches, mass data collection, identity theft crimes, and failed attempts at broad-based federal legislation, 2020 may be the year that state privacy and data security legislation begins to take hold in the U.S. For example, the California Consumer Privacy Act (“CCPA”) and the New York Stop Hacks and Improve Electronic Data Security Act (“SHIELD Act”), both effective in 2020 and with application outside their respective states, are already spurring more active compliance efforts. This rapidly developing area of law presents a dizzying challenge for “compliance” personnel whose plates are already filled with an alphabet soup of regulation. The challenge tends to fall particularly hard on in-house counsel and human resources professionals and their IT counterparts whose teams (many times of only one or two) are frequently spread too thin.
The CCPA and SHIELD Act are by no means the only laws on the books. Other state legislatures, such as New Jersey, are advancing comprehensive data privacy and security laws. And, of course, many states have enacted similar laws – all 50 states enacted data breach notification laws, several states (e.g., Colorado, Florida, Illinois, Maryland, Massachusetts, Nevada, Oregon) require businesses to have reasonable safeguards to protect personal information, including written contracts with vendors that access personal information. On top of that, certain organizations must comply with industry-specific federal mandates, such as the Health Insurance Portability and Accountability Act (“HIPAA”) and the Gramm-Leach-Bliley Act (“GLBA”), while others are balancing international regulation, the most popular one being the European Union’s General Data Protection Regulation (“GDPR”).
Meeting this challenge can seem overwhelming, but there are some strategies and best practices that can help in 2020 and beyond.
- Set expectations. Compliance is not a one-time endeavor. It is an on-going effort, a marathon, not a sprint. Building a strong compliance and risk management program is necessary, but it will take time, resources, and commitment. The support of organization leadership is critical, so get them on board, apprise them of the costs of building an achievable program, and the costs of doing nothing.
- Build your team. The data privacy and security challenge cannot be solved by the IT department alone. Technology safeguards are critical, but they do not replace strong administrative, physical, and organizational controls. In-house counsel and HR professionals should work on eliminating silos and push for an interdisciplinary team – sales, finance, R&D, marketing, operations, legal, HR, IT. Collectively, the team should have deep institutional knowledge; a strong understanding of the business, its need for and uses of data, and threats and vulnerabilities to data; an awareness of industry expectations, and the capacity to influence new practices and procedures for processing data.
- Maintain a Written Information Security Program. It is not enough to say, “We are doing that.” From a compliance perspective, data privacy and security policies and procedures need to be in writing. And, written policies and procedures also help to maintain consistency in the organization’s practices and better support discipline for violations of the rules.
- Vendors – trust but verify. Third-party vendors provide critical support to organizations often involving access to sensitive information. The idiom “a chain is no stronger than its weakest link” is quite appropriate considering many organizations have experienced data breaches because of their vendors’ security incidents. Organizations simply must have a better understanding of the strength of their vendors’ safeguards for protecting information. They should maintain strong vendor management programs that begin to apply at procurement and continue until the service agreement terminates and the organization’s data is secured.
- Communications About Your Program Should be Accurate and Accessible. Increasingly, the law requires organizations to post website statements summarizing their data privacy and security practices. Examples include HIPAA and laws in California, Delaware, and Nevada. These statements should be accurate and accessible. Inaccurate statements, such as those that overstate security safeguards, can lead to deceptive trade practice claims. As required by the CCPA and urged by the flood of litigation under Title III of the Americans with Disabilities Act, the statements also need to be accessible to persons with disabilities.
- Know the Law and Stay in Touch. An organization’s compliance team need not and should not be comprised of lawyers. But it should maintain a keen awareness of applicable legal mandates and a general sense of where the law is headed as it relates to the organization. Active participation in trade and similar associations can be particularly helpful, as can subscribing to dedicated legal resources, blogs, etc.
- Training and Awareness. Employees falling victim to phishing attacks is one of the most frequent causes of a data breach. Regular, role-based training on the organization’s policies and procedures along with general security awareness training can substantially reduce this and other data risks.
- Embrace technology…carefully. The latest devices and software applications can benefit the organization’s business enormously. However, they may not have been developed or designed with data privacy and security in mind, or at least as needed to address the organization’s compliance needs. Consider biometric technologies that tout stronger identity verification for applications such as POS system access and worker time management. If not rolled out or configured carefully, these devices can cause significant legal exposure relating to the collection, disclosure, and destruction of personal information.
- Less is more. Some organizations pride themselves on their comprehensive recordkeeping systems, for example, claiming to have retained all records since inception. Such practices may not be necessary, and in many cases are not prudent. Retaining massive amounts of data may be needed in certain contexts, but it should be carried out strategically and deliberately, with a plan to shed the data once its usefulness has ceased.
- Be reasonable. Perhaps this should be first on the list. But it is last to serve as a reminder that whatever steps are taken, they should be reasonable. Indeed, most regulatory data privacy and security frameworks require “reasonable” safeguards. Of course, this is not easy to define, but reasonableness should be a fundamental principle guiding your program.
With 2020 poised to bring more acuity to the direction of privacy and security law in the U.S., adopting some or all of the above strategies and best practices will help support a strong, adaptive, ongoing, and reasonable privacy and information security program.