U.S. organizations have long focused on federal requirements governing international data transfers. But a growing wave of state enforcement—particularly in Florida and Texas—signals that regulators are increasingly scrutinizing how companies move sensitive data outside the United States, especially when foreign adversaries may be involved. Recent developments suggest organizations should reassess their data flows, vendor relationships, and ownership structures to understand where sensitive information may ultimately land.

Federal Rule Raises the Stakes on Cross-Border Data Transfers

The Department of Justice (DOJ) took a significant step in 2024 when it began implementing regulations restricting certain outbound transfers of sensitive U.S. personal data to entities linked to “countries of concern,” including China, Iran, and North Korea. The rule targets transfers of large volumes of sensitive data—such as precise location data, biometric identifiers, genomic data, and other categories—where access by foreign adversaries could pose national security risks.

As discussed in our earlier analysis of the rule, the framework focuses on transactions involving “covered data” and “covered persons,” and in some cases prohibits transfers outright or requires companies to implement security controls, diligence processes, and recordkeeping obligations. Organizations subject to the rule must examine their vendor relationships, data brokerage arrangements, and service provider agreements to determine whether the transfers fall within the regulation’s scope.

Yet while the DOJ rule represents a significant federal development, enforcement activity suggests that federal regulators are only part of the story.

States Filling the Enforcement Gap

States are increasingly stepping into what some see as a federal enforcement gap. According to recent reports, states have launched more than a dozen investigations or lawsuits related to U.S. consumer data transfers to China or other foreign actors. These actions have targeted companies across multiple sectors—not just traditional data brokers, but also firms handling consumer electronics, genetic data, and online marketplaces.

State regulators often lack explicit authority over national security concerns. As a result, they are using other tools, including consumer protection laws, unfair or deceptive practices statutes, and state privacy statutes, to investigate companies whose data practices may expose Americans’ information to foreign entities.

Texas has been among the most aggressive jurisdictions, filing actions against several companies, illustrating how states may combine allegations related to privacy practices with broader consumer protection claims. Florida, meanwhile, is emerging as another focal point for state enforcement.

Florida Launches Dedicated Unit Targeting Foreign Data Risks

In February 2026, Florida Attorney General James Uthmeier announced the creation of a new enforcement team dedicated to investigating foreign access to Americans’ data. The initiative—called the Consumer Harm from International and Nefarious Actors (CHINA) unit—will pursue both civil and criminal investigations involving foreign corporations’ data practices.

The new unit plans to focus heavily on companies that collect sensitive personal information, including biometric and demographic data. Health care organizations, in particular, may face heightened scrutiny given the sensitivity of the information they handle.

According to the attorney general’s office, the unit will ramp up subpoenas, investigations, and lawsuits under Florida consumer protection laws. The effort is designed not only to address potential risks within Florida but also to serve as a model for other states considering similar initiatives.

Florida’s Investigation Into Lorex Signals Broader Scrutiny

Florida has already begun investigating companies suspected of exposing consumer data to foreign surveillance risks. One notable example is Lorex Corp., a surveillance camera manufacturer that has faced investigations and litigation in several states over alleged connections to Chinese ownership.

As part of Florida’s inquiry, authorities reportedly compelled the company to produce extensive information about its corporate structure, contracts, and software architecture. The investigation highlights a growing focus on how foreign ownership structures or technological dependencies could create pathways for sensitive data to leave the United States.

For organizations, the Lorex matter underscores a key compliance issue: regulators are looking beyond privacy notices and security practices to evaluate who ultimately has access to data—including corporate affiliates, overseas vendors, and parent companies.

Florida’s Offshore Data Law Adds Another Layer

Florida has also enacted legislation restricting certain transfers of health data outside the United States, sometimes referred to as the state’s “Offshore Data” restrictions. The law prohibits the storage of personal health information by healthcare providers using certified electronic health record technology (CEHRT) outside the United States, its territories, or Canada.

When combined with the DOJ rule and the state’s new enforcement unit, these laws create a regulatory environment in which organizations operating in Florida—or handling data about Florida residents—may face multiple overlapping compliance obligations.

Practical Takeaways for Organizations

These developments highlight a critical shift in how regulators view cross-border data transfers. Organizations should consider taking several steps:

• Map data flows. Companies should understand where sensitive data is stored, processed, and transmitted—including by vendors and subcontractors.

• Assess vendor and ownership risks. Regulators are paying closer attention to foreign ownership interests, corporate affiliations, and data access rights.

• Review contracts and technical controls. Agreements with service providers should address cross-border data transfers and incorporate appropriate safeguards.

• Monitor state developments. State enforcement efforts are expanding rapidly and may reach companies that previously focused primarily on federal requirements.

The combined pressure from federal regulators and an increasingly active group of state attorneys general suggests that scrutiny of foreign data transfers is likely to intensify. As states continue to explore creative ways to regulate cross-border data flows, organizations may find that compliance requires not only understanding where their data goes—but also who ultimately controls it.