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WHAT IS GDPR AND HOW WILL IT AFFECT BUSINESS? MUST-KNOW FOR BUSINESS OWNERS

April 30, 2018
SERGEY STUKAN
CMO
On May 25 the Internet as we know it will end as GDPR regulation will come into force. These four letters have caused an uproar among European businesses, and over 25% of US companies are planning to exit the EU market. So what is GDPR and how will it affect your business? To answer these and many other questions, we've prepared a short guide to GDPR that will explain what every web development company and business owner needs to know about the new regulations.

WHAT IS GDPR?

General Data Protection Regulation or GDPR for short was adopted by the European Council and the European Parliament on April 27, 2016. The authorities provided businesses with a two-year preparation period. It was the most significant change in the European data protection laws since 1998.
WHAT IS GDPR?
The goal of GDPR is not to punish businesses, but instead to protect individuals' personal information and broaden their rights. The new regulation aims to equalize the data protection laws of European countries and create a single reference point for national data protection agencies and regulators. Faced with recent high-profile data leakages around the globe, the governments will only make data protection laws even more severe. To stay in business, European companies should ensure GDPR compliance before the zero hour.

SHOULD YOUR BUSINESS BOW TO THE INEVITABLE GDPR REQUIREMENTS?

Whether your business is in the EU or it caters to its citizens, you will need to implement changes. You should follow the GDPR requirements if you:

  • want to improve your customer retention rate and increase the revenue;
  • plan to spread your US-based company across the pond;
  • wish to create your own app for the global market;
  • don't have an established business yet, but plan to build a startup;
  • are an app developer building mobile apps, websites, etc for your clients;
  • use targeted ads, social media, and other online marketing tools to attract new customers.

WHAT DOES EU GDPR CHANGE FOR YOUR BUSINESS?

Seeing as the 1998 data protection regulation has become outdated by now, there are many requirements businesses must meet. Here is a list of the most significant changes:

  • Personal data definition is broader now, and besides the name, contacts, financial and medical information it includes IP addresses.
  • User consent gets trickier. Your business should have a lawful reason to get and store personal data. You should also receive separate permissions for every data processing move you plan.
  • Data subjects' rights become broader. Ensure the functionality to erase user data or transfer it to other services upon request. Users may also request corrections and detailed information on the ways their information is used.
  • Data processing documentation is necessary. Your company will need to keep detailed records of the time the user consent was obtained, its wording, the safety procedures in place and reports on all processing activities.
  • Data breaches must be reported within 72 hours. You will need to monitor data security and communicate even the minor violations to the national data protection regulator or the user.

CAN YOU RISK IGNORING GDPR?

New requirements seem like a lot of work, and despite a two-year preparation period, few companies have implemented the changes. Should you hurry and try to meet the GDPR requirements in time or will there be a grace period? You should, because there won't be. And you don't want to face the new Draconian fines. According to GDPR, companies will have to pay 10 to 20 million euro or 2% to 4% of their worldwide annual turnover, whichever is higher. Companies will have to pay the fines if they fail to address a reprimand or an order from the national data protection regulator.

Users can also file lawsuits against companies that do not comply with GDPR regulations and request compensation for the wrongful acquisition or processing of their data. Besides the monetary loss after the compensation payout, companies might suffer great business losses due to the damaged reputation. The potential adverse impact for businesses that fail to comply with new requirements might be as severe as bankruptcy.

HOW TO ENSURE YOUR BUSINESS IS GDPR-COMPLIANT?

At first glance, GDPR requirements seem impossible to meet in the remaining few weeks before they come into force. But if you look closer, you'll notice, there are five critical steps your company should take that will take care of most GDPR-related needs:
HOW TO ENSURE YOUR BUSINESS IS GDPR-COMPLIANT?

Map Your Data

The first step to solve any problem is by admitting you have it. Therefore, start your data processing changes by reviewing all the user data you store. Create a GDPR folder in your company file system and record all categories of data you store. Map where you get the information, how long it is stored, how it is processed and with whom it is shared. The map you create should give you a clear picture of the data flow in and out of your system and the critical points you need to address to make your company meet the new EU regulation.

Cover The Lawfulness Of Data Processing

Before you process the user's personal data, you need to ensure you have the legal right to do so. If you outsource data processing to third parties, your contract should include GDPR-compliance clauses. Otherwise, you will need to find new partners. Your data processing is lawful if:

  1. You have a legitimate interest in processing the users' data, and they reasonably expect you to process it. Business' legitimate interest does not override an individual's interest and should have minimal effect on privacy.
  2. Data processing is covered by contractual arrangements, like the use of cookies to track items added to the cart.
  3. You have gotten consent for data storage and processing from the user. Do not assume users' consent. It should always be an opt-in option, not an opt-out. Explain in simple words how the information will be used and get consent before May 25 to ensure your data processing falls under GDPR before its coming into force.

Update Privacy Notices

You need to review all your internal and external privacy notices and update them according to new EU regulations. Your notices should include answers to these questions:

  • Which data do you need to collect?
  • How will it be processed?
  • What is the lawful basis for each processing action?
  • How long will the data be stored?
  • How can users exercise their rights?
Implement The Means For Data Subjects To Exercise Their Rights

We've already covered user rights post-GDPR, and your company should have functionality and templates in place for every eventuality. Design the templates for user requests to review and correct their data. Employ web development services to add data erasing and consent withdrawal features. Appoint a data protection officer who will manage prompt responses to user queries in under 30 days.

Employ New Internal Processes For Data Protection

It's not enough to give an appearance of GDPR compliance; personal data protection should become a part of your company's everyday processes. For this, you will need to update data security and implement breach notification protocols. All employees should go through data protection training to prevent accidental breaches.

HOW WILL ONLINE MARKETING WORK POST-GDPR?

Whenever you use personal data in marketing, be aware of the different responsibilities of data controllers and data processors. As the data controller, you will be liable for data collection, storage, and usage. If you use Google AdSense or Facebook tools, they will act as data processors, handling personal data on your behalf. Most of Facebook services for business are GDPR-complaint, though sometimes you will be responsible for upholding EU regulations. For instance, if you upload a custom audience data file, you will have to notify users of their data being processed and getting their consent.

In case you use Google AdSense to monetize your website, you will need to get visitors to agree to viewing personalized ads, which is not likely. AdSense is also rumored to add non-customized advertisements as a feature for webmasters to use. This, however, might significantly decrease the ads' efficiency. As a result, the price of views and clicks might also drop.

WILL USERS MANIPULATE BUSINESSES?

WILL USERS MANIPULATE BUSINESSES?
Some business owners are wary of GDPR as data subjects get a lot of power over data processing companies. Users might jump at the chance to manipulate business owners by restricting the use of their personal data. Some people might even sell their data to the highest bidders the same way companies have been paying for email and phone directories obtained through shady channels.

On the one hand, companies might pay for high-quality data that will bring a significant return on investment. On the other hand, businesses have the right to turn down the customers trying to sell personal data. It remains to be seen whether most users will even know the full extent of their rights post-GDPR.

WILL GDPR AFFECT OFFSHORE SOFTWARE DEVELOPMENT OUTSOURCING?

At FreshCode, we are 100% aware of the latest requirements of GDPR and build our client's projects with new regulations in mind. When dealing with our company, don't worry about running into trouble with national data protection regulators whether your company is EU-based or only catering to European customers. Our developers and project managers will do their best to incorporate GDPR-compliant features into your product as unobtrusively as possible. We can also answer any question you have about GDPR and advise on the best course of action to update your product until it meets the new regulation.

GDPR is not designed to make business owners' lives difficult; the regulation wants them to put users' interests first when collecting, processing and sharing data. Your privacy and data processing policies should be transparent, and you should obtain consent before using personal data to earn more money. Otherwise, you risk lawsuits and hefty fines. Still, GDPR will not ruin online marketing. Instead, it will increase the users' level of confidence, secure their loyalty and ensure your business has high-quality data about customers. And if you can't implement necessary changes internally, reach out to professional software development services that will make your online business GDPR-compliant in no time..

If you are interested in learning more about how to choose a custom software development company for your up-and-coming startup, or the best ways to manage a project, you will love the FreshCode blog. Subscribe to our newsletter to keep the hand on the pulse of the latest IT trends.
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