The General Data Protection Regulation (GDPR) is a comprehensive data protection law that came into effect on May 25, 2018. It applies to all companies operating within the European Union (EU), regardless of size or location. This includes small and medium-sized businesses (SMBs), which are defined as companies that employ fewer than 250 people and have a revenue of less than $50 million.
The GDPR replaces the 1995 EU Data Protection Directive and strengthens the rights of individuals concerning their data. It also imposes significant fines for non-compliance. SMBs must take the necessary steps to comply with the regulation or risk facing significant financial penalties.
It is important to note that the GDPR is not limited to just the EU; it is also used in other countries such as the United States. Many US companies do business in the EU and are subject to the GDPR if they collect, process, or store the personal data of EU citizens. Even if a company is based outside the EU, if it processes the personal data of EU citizens, it must comply with the GDPR. Additionally, many states in the US have data protection laws, such as the California Consumer Privacy Act (CCPA), that are similar to the GDPR.
One of the critical aspects of the GDPR is the requirement for companies to obtain explicit consent from individuals before collecting, processing, or sharing their data. This includes sensitive personal data such as medical information, religious beliefs, and sexual orientation. SMBs must ensure that their consent processes are clear, concise, and easy to understand. They must also keep records of all consents obtained and be able to demonstrate that consent was obtained if challenged.
SMBs must also appoint a Data Protection Officer (DPO) if they process sensitive personal data or if their data processing activities are likely to result in a high risk to the rights and freedoms of individuals. The DPO monitors compliance with the GDPR and advises the company on data protection issues. They also act as a point of contact for individuals and the supervisory authority.
The GDPR also requires companies to implement appropriate technical and organizational measures to ensure the security of personal data. This includes measures such as encryption, firewalls, and regular security audits. SMBs must also conduct regular risk assessments to identify any potential vulnerabilities and take steps to mitigate them. In the event of a data breach, SMBs must notify the relevant supervisory authority within 72 hours and, in some cases, inform the affected individuals.
Another critical aspect of the GDPR is the right to be forgotten. This gives individuals the right to request that the company erase their data if it is no longer necessary for the purpose for which it was collected. SMBs must have processes to handle such requests and take all reasonable steps to erase the data in question.
In summary, the GDPR significantly impacts small and medium-sized businesses. Compliance with the regulation requires significant time and resources, including appointing a DPO, implementing appropriate security measures, and updating consent processes. The potential fines for non-compliance are substantial and can have a severe financial impact on SMBs. SMBs must take the necessary steps to comply with the GDPR to protect their customers' personal information and avoid penalties.