Data Compliance Standards: A Comprehensive Approach

To deal with the rise of data breaches and cyber-attacks, we need robust data compliance standards. These standards will be instrumental in protecting sensitive data and ensuring compliance with legal and ethical obligations.

Depending on the type of data your organization deals with and the industry, among other factors, you will be required to adhere to the appropriate regulatory standards.

Consumer Data Privacy Laws

Consumer data privacy refers to how companies and third-party agencies collect, use, manage, and protect various data types from transactions. The different consumer data privacy laws, like GDPR, HIPAA, and CCPA, provide consumers with certain rights over their data. This includes the right to know what information is being collected and the right to request the deletion of their data, among others.

Here’s a list of the popular consumer data privacy laws:

General Data Protection Regulation (GDPR)

One of the most comprehensive global protection laws, the European Union’s GDPR, went into effect in 2018. It regulates data protection for individuals in the EU and the European Economic Area. Not only does GDPR apply to companies based in Europe, but it also applies if you do business with any person under the EU’s jurisdiction.

GDPR mandates organizations to obtain explicit consent from individuals before collecting and processing their data. It ensures that people understand the type of personal data businesses keep and how it is processed. GDPR protects PII, such as names, IP addresses, locations, telephone numbers, biometric data, and identification numbers.

The seven principles of the GDPR include:

1. Lawfulness, Fairness, and Transparency
2. Purpose Limitation
3. Data Minimization
4. Accuracy
5. Storage Limitation
6. Integrity and Confidentiality
7. Accountability

There are strict rules in place for non-compliance with the GDPR Compliance, following a tiered approach based on the severity of the violation. Depending on which is higher, the maximum penalty is either 4% of the organization’s annual global turnover or €20 million.

Health Insurance Portability and Accountability Act (HIPAA)

The HIPAA Act of 1996 is a U.S. federal law that protects personal health information (PHI) and medical records from being disclosed without the individual’s consent or knowledge. It ensures that healthcare workers and organizations cannot disclose patient information or files. HIPAA requires that all health records be restricted to only those with valid reasons for accessing them.

The risks involved in the unauthorized use of healthcare information involve the purchase of fraudulent prescriptions and the creation of fake medical insurance claims. It also involves personal information, such as names, social security numbers, and addresses, that can be used for identity theft. With the rate of healthcare data breaches almost doubling between 2018 and 2021, HIPAA compliance has become an increasingly common mandate for organizations handling such data.

It is mandatory that when electronic records are shared, precautionary measures and necessary encryption must be in place. Among the key features of HIPAA is the requirement of an audit trail of every interaction someone has taken with the data. Essentially, any organization doing business in healthcare must adhere to HIPAA data security and compliance standards. “Covered entities” include not only providers and health plans but also business associates, including:

• Insurance companies
• Software businesses
• Medical transcriptionists
• Data transmission providers

Non-compliance with HIPAA’s Privacy Rule may lead to a maximum possible fine of $1.5 million per year for each category of violation. HIPAA violations usually result in the company paying its fines or agreeing to a settlement.

California Consumer Privacy Act (CCPA)

The CCPA, a privacy law enacted in California, guarantees rights over personal data only for California residents. It governs the processing of personal data by businesses operating in California or collecting data from the state’s residents.

Personal information includes names, addresses, phone numbers, email addresses, etc. The CCPA grants Californians the right to request businesses to disclose the types of personal information they’ve collected. Under the CCPA, residents have the right to:

• Know what information a company collects and how it’s used
• Delete the collected information
• Opt-in or opt-out of the sale of their data
• Limit the usage of their information
• Non-discrimination
• Correct inaccurate records
• Sue a company for a data breach

Mostly, the California Attorney General deals with CCPA violations. Based on a tiered system, the state issues fines. Alternatively, they may call for civil penalties for non-compliance. In the event of a data breach, residents can sue a company directly if their information is exposed.

India’s Digital Personal Data Protection (DPDP) Bill

In early August 2023, the Indian Parliament passed the DPDP Act, the first cross-sectoral law on personal data protection in India. It applies to the processing of digital personal data within India, whether collected online or collected offline and digitized. The bill also applies to such processing outside India for goods or services being offered in India.

While the act allows personal data to be processed for lawful purposes, it requires obtaining the concerned individual’s consent for legitimate uses. Individuals have the right to request a summary of all collected data, as well as correction, completion, updating, and erasure of their data.

For businesses, the bill mandates security safeguards. It creates purpose limitations and obligations to provide notice of data collection or processing. The law requires that businesses create grievance redress mechanisms.

Grievances and complaints will be handled by the Data Protection Board (DPB). However, the board has a limited mandate to oversee the protection of data breaches, direct remedial action, and conduct inquiries. This regulatory entity can impose monetary penalties of up to 250 crore rupees (approximately $30.5 million).

Data Security Compliance Standards

Data security standards are another essential component of data compliance. These standards are guidelines or criteria that organizations follow to protect sensitive and confidential information. These standards help prevent unauthorized use, access, disclosure, disruption, modification, or disruption of data.

PCI Data Security Standard (PCI DSS)

The PCI DSS, developed by the Payment Card Industry Security Standards Council, is a set of security standards that governs the processing of payment card information. This standard applies to organizations that store, process, or transmit credit cardholder information.

PCI DSS mandates that organizations that accept payment cards must follow specific security protocols to protect payment card information. It ensures that cardholders and consumers remain safe and protected.

The focus of PCI DSS is on payment information at the point of sale, including credit card numbers, names, addresses, phone numbers, etc. Unlike most other standards, PCI DSS isn’t mandated by any government’s set of rules. Instead, it’s an invention of the major credit card networks (Visa, Mastercard, Discover, JCB International, and American Express). It is enforced through penalties to noncompliant payment processors or merchants.

If a company is found non-compliant with the set of rules, it may result in hefty fines, and the relationship with the bank may be terminated. Penalties can call for compounding fines for each incident of non-compliance and a loss of merchant account (making it difficult to process credit card transactions).

SOC 2 Type I and II

SOC 2 (Service Organization Control 2), developed by the American Institute of CPAs (AICPA), is a security framework of processes and controls to ensure data security. It helps ensure third-party service providers securely manage data to protect clients’ privacy.

SOC 2 works on five trust criteria—availability, confidentiality, security, privacy, and processing integrity. The SOC 2 types—Type 1 and Type 2—were introduced by the AICPA in the 2010s, addressing the growing requirement of firms to prove their state of security. You can pick the SOC 2 type based on your current business needs.

A SOC 2 Type 1 compliance is a certification of the suitability of the design controls of a service provider’s system at a specific point in time. If you’re a SaaS vendor who processes, gathers, or manages sensitive data, you should consider SOC 2 Type 1 compliance. A SOC 2 Type 1 report assures potential customers that your organization has passed the auditing procedure and that their data will remain safe.

SOC 2 Type 2 compliance provides a higher level of assurance when compared to SOC 2 Type 1. To comply with this requirement, your company should pass a thorough auditor examination of internal control policies and practices over a particular period of time. A SOC 2 Type 2 report assures potential customers that your firm applies the best practices on data security and control systems. This data compliance standard helps bag more contracts from bigger firms.

Pursuing SOC 2 is voluntary; it isn’t necessarily motivated by compliance or other regulations, such as HIPAA or PCI-DSS. It is common among SaaS and cloud computing organizations as a data center compliance standard, demonstrating that they’re properly protecting their customers’ data.

ISO Standards

The ISO standards are internationally recognized data compliance standards that help companies protect consumers and end-users. These were developed by the International Organization for Standardization (ISO).

ISO 9001, the most well-known ISO standard, provides the criteria for a quality management system. It helps prepare your organization to produce quality services and products meeting customer and regulatory requirements. Initially published in 1987, the current version of ISO 9001 was released in September 2015. It applies to any organization, regardless of industry or size.

To improve security and protect company assets, the ISO/IEC 27001 specifies the requisites for an information security management system (ISMS). It enables organizations of all sizes and sectors to manage the security of their assets, including IP, financial information, employee data, and information entrusted by third parties. The certification requirements include a minimum set of policies, plans, procedures, records, and other well-documented information.

ISO certification is considered a mark of quality that will enhance the credibility of your organization’s product or service. It also leads to wider market access since many customers and clients prefer their suppliers to be ISO-certified.

Limitations of Data Regulatory Standards

The different data compliance standards have certain associated challenges; understanding these limitations will help your organization navigate the complexities of data compliance.

• The data compliance regulations vary across different countries and regions. If your organization operates internationally, it may get challenging to comply with the diverse regulatory requirements.
• It can be a costly endeavor to achieve and maintain compliance, especially for smaller businesses. The process typically involves multiple stakeholders, systems, and data types, in addition to requiring significant changes to existing data practices and infrastructure.
• Coordinating and aligning the different data compliance standards can be challenging due to conflicting requirements, interests, or preferences among different users.
• With rapid technological advancements and evolving cyber threats, data compliance standards must continue evolving. Organizations may struggle to stay up-to-date with the constantly changing requirements, having to adjust their compliance strategies frequently.

Understand the essentials of data compliance and how to ensure your organization meets regulatory requirements with our comprehensive guide.

Conclusion

The dynamic digital landscape, where data is valuable and vulnerable, requires organizations to adopt rigorous data compliance standards. While data helps businesses drive growth and innovation, it’s also associated with the possibilities of exploitation. This necessitates regulatory standards, in terms of data security and privacy, to safeguard the data.

Among the various data compliance standards are GDPR, HIPAA, CCPA, PCI DSS, SOC 2, and ISO standards. The choice of regulations your organization must abide by depends on the type of data you handle, the nature of your business, your operational locations, and the jurisdictions within which you operate.

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