Pretty much every country in the world has put comprehensive consumer privacy laws into place. These privacy acts regulate data collection, how data subjects are informed, and how personal data can be used. Without these regulations, confidential data could end up in the wrong hands, and have huge implications for businesses that can cause catastrophic privacy concerns.
If independent organizations and individuals do not follow the laws put in place to protect data, then there will be serious repercussions, and even civil penalties. Breaking general consumer data privacy laws can land businesses in big trouble with legal ramifications like an enormous financial fine and criminal penalties.
In this article, we will look at why data privacy laws have been put in place, why businesses must follow them, and the most important laws that all businesses should be aware of to avoid foul play.
Why are Data Privacy Laws Put in Place?
If you regularly use online services, as most people today are, you will be well aware of the many ways in which data can be used. Because companies have access to sensitive data, if it is not handled properly, then consumer data privacy can be put in jeopardy through a data leak or by getting into the wrong hands.
Without stringent security requirements like data protection laws and data privacy acts, sensitive data could be vulnerable to things such as data breaches, extensive surveillance, and uncontrolled surveillance. Because of this, there could be a lack of transparency regarding how people's sensitive personal information is processed and stored. These are problems that occur in countries with a weaker supervisory authority and privacy laws.
What Happens When Companies Do Not Adhere to the Comprehensive Privacy Laws?
The repercussions of not following data security laws can be catastrophic, and not just from a federal law standpoint. Infringement of laws can result in extremely personal data such as credit card data, protected health information, social security numbers, software sources and so many other types of data being stolen. This therefore can cause huge personal privacy issues that can violate the rights of individuals.
According to a 2011 study conducted by Baker and Goudie, a vast majority of cybersecurity attacks have been linked to businesses failing to comply with United States data privacy legislation. Cyber attacks can happen in less than a minute. As a result, any infringements or failures to comply with data privacy legislation could be catastrophic for a business's data stores.
In addition to the improper handling of data, breaching data protection laws can land businesses in legal trouble. The Federal Trade Commission (FTC) can impose a monetary fine of up to $40,000 per alleged violation or intentional violation of the FTC Act or the Children's Online Privacy Protection Act (COPPA). Each day that the violation continues will be viewed as a violation and impose a separate fine without a maximum penalty.
How do Data Privacy Laws Change from State to State?
In the U.S., there are currently nine states which have comprehensive data privacy laws and protection rights. These states are California, Connecticut, Virginia, Colorado, Utah, Iowa, Indiana, Tennessee, and Montana. However, the most important and influential states are:
California - The state of California has been the pioneer in the U.S. when it comes to implementing strict privacy laws. It was the first state to pass in-depth data privacy legislation via the California Consumer Privacy Act (CCPA) as well as the California Privacy Rights Act (CPRA). The CCPA establishes strict privacy rights and requirements for the collection and selling of California residents’ personal information. The CPRA is simply an extension of the CCPA.
Connecticut - In 2022, Connecticut became the fifth state in the U.S. to implement comprehensive privacy legislation when it approved the Connecticut Data Privacy Act. This act includes several stricter data protection acts for minors, but still retains a similar framework as its predecessors.
Virginia - In March of 2021, Virginia became the second U.S. state to pass comprehensive data privacy legislation. It enacted the Virginia Consumer Data Protection Act (VCDPA), which gives the people of Virginia the right to request and access their data and personal information, which is stored by businesses. The act also requires companies to conduct regular data protection assessments.
Colorado - In June of 2021, just a few months after Virginia, Colorado signed the Colorado Privacy Act (CPA). The act, which was effective as of July 1st, 2023, lays out five key rights for consumers in Colorado. These rights are the right to access, right to correction, right to delete, right to data portability, and right to opt-out.
Utah - On March 24, 2020, Utah passed the Utah Consumer Privacy Act (UCPA). This act was put in place to protect consumer data collection, deletion, and selling rights. The bill has been effective as of December 31, 2023, and takes a much more business-friendly approach to the protection of consumer protection.
Other Data Privacy Acts Across the U.S.
While there are many states that do not have very comprehensive data laws, there are ongoing efforts to enact national standards that would cover every U.S. state. This act would be called the American Data Privacy and Protection Act (ADPPA), and is currently under review by the U.S. House of Representatives Committee.
Privacy Act of 1974
The Privacy Act of 1974 was put in place to control how law enforcement actions or federal agencies can collect and use the data of the American people. The act stops the disclosing of personal information without consumer consent, and reserves the individual's right to access and change their records if the records are inaccurate.
Health Insurance Portability and Accountability Act (HIPAA)
In 1996, the president at the time, Bill Clinton, signed the HIPAA which created standards and regulations as for how healthcare providers can use the personal data of a patient. However, these regulations only apply to covered entities (such as doctors, nurses, psychologists, and dentists), health plans (such as healthcare insurance providers), and healthcare clearinghouses, whose job is to process medical information.
These regulations stipulate that covered entities must comply with an individual's right to see their health information, correct their health information, and that covered entities cannot share this health information without the individual's written consent.
GRAMM-LEACH-BLILEY ACT (GLBA)
Again passed by President Clinton, this time in 1998, the GLBA covers the topic of data privacy for financial institutions. This law requires financial institutions to safeguard sensitive data and explain how they use and intend to use the data of their customers. It also requires the institutes to have a policy in place that helps to protect consumer data against potential security threats. Institutions must also provide their customers with a privacy notice that details what information will be collected.
Children’s Online Privacy Protection Act (COPPA)
Also passed in 1998, COPPA was put in place to put limits on what companies can do with the extensive amount of data that they have collected about children under 13. The law states that any company that collects data from children under the age of 13 must provide an online privacy policy that details all their data practices, and must obtain parental or guardian consent before taking the data. The parents then must also have the ability to access the data on their children as well as review, delete, and prevent further collection of data.
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