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What is GDPR and how does it affect a business

Blog post cover image on What is GDPR, it's history and principles and how does it affect a business

Data privacy has become a major concern for individuals as well as organizations in this digital age of 21st century. The General Data Protection Regulation (GDPR) was introduced on 18th May 2018 which revolutionized the data protection laws and practices in the European Union (EU). It impose the obligations onto the organizations located anywhere in the world if they collect or monitor the data of people of European Union. This blog post explores GDPR compliance in detail and explains how GDPR can affects businesses in todays interconnected world.

What is GDPR?

The General Data Protection Regulation (GDPR) is a comprehensive set of rules on data protection and privacy rights. The European Commission enforced this regulation officially on April 25, 2018 in order to safeguard the personal data protection and privacy rights of Individuals of EU. The official legal document of GDPR regulation defines 11 chapters containing 99 articles and 173 recitals in total on data protection and privacy rules. The GDPR obliges organizations or individuals located anywhere in the world if they target or monitor the personal data of individuals of EU.

A Brief History of GDPR

When the internet was in its infancy phase in 1990s, the European Union had initially enforced the Data Protection Directive (Officially known by Directive 95/46/EC) in 1995 for regulating the processing of personal data and it’s movement on internet. The Data Protection Directive (DPD) was safeguarding the EU’s fundamental human right of free movement and control of personal data

The DPD regulation allowed the EU countries to control and customize their own privacy laws. But, after a passage of some time, the EU countries were facing issues due to their varied data protection laws. However, data protection laws of EU countries couldn’t address the rapid advancements of modern technologies, the rise of online platforms or applications and the nature of data flows in global internet. Due to inconsistencies in data protection laws, the businesses were required to meet the multiple privacy requirements if they needed to introduce their services between two or more countries in Europe. This made very hard challenge for businesses to follow multiple data protection laws of different countries of Europe.

To tackle the above mentioned challenges, the European Union felt a need of a new general standard of data protection regulation that can be easily agreed upon and followed by all EU member states. In 2012, The European Commission proposed new reforms over existing two decades old DPD regulation to strengthen and ensuring consistencies in data protection and privacy laws throughout the EU. After the four years of legislative process, European Commission adopted new regulation GDPR on 14th April 2016 in place of existing Data Protection Directive regulation. This new adopted GDPR regulation set two years transition period for organizations so that they may prepare and adapt their practices to meet new requirements of GDPR. Finally the European Commission officially enforced a new regulation GDPR on 25th April 2018 aiming to protect individual’s personal data and provided consistent and general framework for organizations operating within EU.

What is GDPR Compliance?

GDPR compliance means following a set of rules of General Data Protection Regulation (GDPR) in order to protect the privacy rights and personal data of individuals. It involves implementing data protection principles such as controlling and processing data in fair and transparent way, collecting only what is needed, keeping it accurate and secure, and protecting privacy rights of people. GDPR compliance mandates organizations to follow data protection principles. It also requires organizations to carry out adequate security measure to prevent data breaches and alert users on event of breach . Being GDPR Compliant plays a vital role for businesses to gain trust of their customers. It also ensure that their businesses treat their personal data with responsible and lawful manner.

What data does GDPR apply to?

The General Data Protection Regulation (GDPR) applies when processing of personal data of EU’s citizens takes place. Personal data refers to the information that makes natural personal identified or identifiable among others. Personal data includes but not limited to;

  • Basic Identification Information: Names, phone numbers, addresses, social IDs, national IDs, national tax number, ip addresses and others.
  • Sensitive Personal Data: This category of personal data includes information such as political opinions, health information, biometric data, racial or ethnic data, data related to sexual orientation.
  • Online Identifiers: Usernames, cookies, device IDs and other online Identifiers that can be used to identify individuals on online applications.
  • Financial and Transactional Data: Such type of personal data includes bank account details, credit card information, payment and purchase records.
  • Consumer and marketing data: It includes behavior pattern and preferences of consumers, purchase history and feedbacks of customers.
  • Employment related data: Payroll information, performance evaluation records and employee agreement or contracts.

Where does GDPR compliance apply to?

The jurisdiction of GDPR extends to all those organizations located outside of EU member states if they are offering services or products or to the people within EU. The GDPR also applies to all those organizations who monitor the behavior of individuals of EU. In addition, if an organization is located within EU member states, then it must comply to the GDPR even when the data is processed inside or outside of EU.

Does GDPR compliance apply to UK after Brexit deal?

Following the Brexit deal, the EU’s GDPR is no longer applicable to the UK domestically, as UK has its own version of GDPR known by UK-GDPR alongside 2018 Data Protection Act. The new UK’s GDPR which come effect on January 31, 2020 resembles with the EU’s GDPR with minor modifications.

Now, UK’s websites or organizations must now comply with Data Protection Act 2018 and UK-GDPR if they are processing personal data domestically in UK. If the UK’s websites or organizations process or monitor the personal data of EU citizens then they must comply with EU’s GDPR, UK-GDPR as well as DPA-2018.

As per provisions of agreement signed between UK and EU, UK is now “a third country” under the EU’s GDPR. However, the EU approved an adequacy decision for UK on June 28, 2021. This adequacy decision ensures the free flow of personal data between UK and EU for four years period. Hence, this adequacy decision allows the UK’s websites or organizations to continue unrestricted business as usual for processing the personal data till June 2025.

Seven key principles of GDPR

The General Data Protection Regulation (GDPR) is built on seven fundamental principles that govern how personal data is processed. These seven principles provide organizations a framework for ensuring compliance and protecting the privacy rights of individuals. The seven principles of GDPR are as follows;

1. Lawfulness, fairness and transparency:

Organizations must have a valid reason (like consent or a contract) to collect and use personal data. They should also be open and honest about how they will use the data.

2. Purpose limitation

Organizations should collect personal data for specific, explicit, and legitimate purposes. They should not process the data for any other purposes unless they have a valid reason to do so.

3. Data minimization

Organizations must minimize the personal data they collect and process. They should only collect and retain the data that is necessary for the intended purpose. And organization should avoid collecting excessive or unnecessary information.

4. Accuracy

Organizations are responsible for ensuring the accuracy of personal data. They should take necessary measures to keep the data accurate, up to date. And they should also rectify any inaccuracies in a timely manner.

5. Storage limitation

Organizations should store personal data for no longer than necessary. They should establish appropriate retention periods for processing personal data. They should also delete or anonymize the data when it is no longer needed for its original purpose.

6. Integrity and confidentiality

Organizations should implement security measures to protect personal data. They should protect it from unauthorized access, loss, or damage through appropriate technical and organizational safeguards.

7. Accountability

Organizations are responsible for complying with the GDPR rules. They should keep records of their data processing activities, conduct privacy assessments. And they should have necessary measures in place to protect personal data.

By abiding by these above seven principles, businesses actively protect people’s rights and privacy when handling their personal information.

How can GDPR compliance affect a business?

GDPR compliance has a significant impact on businesses. It ensures data protection, builds customer trust, ensures legal compliance, improves data governance. It also provides a competitive advantage, facilitates cross-border data transfers, enables effective breach response, and enhances reputation. By prioritizing GDPR compliance, businesses can protect personal data, avoid penalties, establish efficient data management practices, gain a competitive edge, expand globally, respond effectively to breaches, and build a positive brand image.

Compliance with GDPR is essential for businesses operating within the European Union. As it demonstrates a commitment of businesses to responsible data handling and privacy protection. Organizations that violate the GDPR are subject to severe fines of up to 4% of annual global revenue or 20 million Euros, whichever is greater.

During the last couple of years, large number of companies were fined on violating GDPR regulations. On May 22, 2023, Ireland’s Data Protection Commission slapped social media conglomerate Meta with a record-breaking €1.2 billion ($1.3 billion) fine for transferring data collected from Facebook users in the EU/EEA to the US, violating GDPR international transfer guidelines. This is highest ever fine imposed over violation of GDPR.

On July 16, 2021, the Luxembourg National Commission for Data Protection (CNDP) issued the biggest fine ever of year 2021 for the violation of the GDPR in the amount of €746 million ($887 million) to Amazon.com Inc.

GDPR Compliance with WordPress websites

GDPR compliance has a significant impact on WordPress websites. It bring important changes in how personal data is handled and user privacy is protected. The key impacts include enhanced user privacy through explicit consent and transparency in data processing. Websites must implement stronger data security measures to safeguard personal data from unauthorized access. It also ensure prompt response in case of data breaches.

GDPR also introduces stricter rules for consent management, requiring clear language and options for users to control their data. Website owners need to ensure compliance of third-party vendors and plugins, reviewing their privacy practices and establishing data processing agreements. Non-compliance can result in severe penalties and reputational damage.

Overall, GDPR compliance benefits WordPress websites by putting user privacy first, encouraging transparency, and establishing ethical data management practices. It helps build trust with website users, ensures legal compliance, and promotes a more secure and respectful online environment.

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