How startups can ensure CCPA and GDPR compliance in 2021

Published April 15, 2021

Beth Winters
Contributor

Beth Winters, JD/MBA, is the solutions marketing manager of Aparavi, a data intelligence and automation software and services company that helps companies find and unlock the value of data.

Data is the most valuable asset for any business in 2021. If your business is online and collecting customer personal information, your business is dealing in data, which means data privacy compliance regulations will apply to everyone — no matter the company’s size.

Small startups might not think the world’s strictest data privacy laws — the California Consumer Privacy Act (CCPA) and Europe’s General Data Protection Regulation (GDPR) — apply to them, but it’s important to enact best data management practices before a legal situation arises.

Data compliance is not only critical to a company’s daily functions; if done wrong or not done at all, it can be quite costly for companies of all sizes.

For example, failing to comply with the GDPR can result in legal fines of €20 million or 4% of annual revenue. Under the CCPA, fines can also escalate quickly, to the tune of $2,500 to $7,500 per person whose data is exposed during a data breach.

If the data of 1,000 customers is compromised in a cybersecurity incident, that would add up to $7.5 million. The company can also be sued in class action claims or suffer reputational damage, resulting in lost business costs.

It is also important to recognize some benefits of good data management. If a company takes a proactive approach to data privacy, it may mitigate the impact of a data breach, which the government can take into consideration when assessing legal fines. In addition, companies can benefit from business insights, reduced storage costs and increased employee productivity, which can all make a big impact on the company’s bottom line.

Challenges of data compliance for startups

Data compliance is not only critical to a company’s daily functions; if done wrong or not done at all, it can be quite costly for companies of all sizes. For example, Vodafone Spain was recently fined $9.72 million under GDPR data protection failures, and enforcement trackers show schools, associations, municipalities, homeowners associations and more are also receiving fines.

GDPR regulators have issued $332.4 million in fines since the law was enacted almost two years ago and are being more aggressive with enforcement. While California’s attorney general started CCPA enforcement on July 1, 2020, the newly passed California Privacy Rights Act (CPRA) only recently created a state agency to more effectively enforce compliance for any company storing information of residents in California, a major hub of U.S. startups.

That is why in this age, data privacy compliance is key to a successful business. Unfortunately, many startups are at a disadvantage for many reasons, including:

Fewer resources and smaller teams — This means there are no designated data privacy officers, privacy attorneys or legal counsel dedicated to data privacy issues.
Lack of planning — This might be characterized by being unable to handle data privacy information requests (DSARs, or “data subject access requests”) to help fulfill the customer’s data rights or not having an overall program in place to deal with major data breaches, forcing a reactive instead of a proactive response, which can be time-consuming, slow and expensive.