While it’s common for companies to think that simply having a data privacy policy is enough to meet privacy law requirements, a strong privacy program involves much more than what’s visible on the “stage.” Behind the curtain, businesses must navigate a complex web of legal obligations.
Much of the work required is guided by hidden compliance mechanisms that protect your business, including managing third-party vendors, executing data-processing agreements, conducting privacy impact assessments and properly configuring website tracking technologies. These behind-the-scenes efforts play a crucial role in safeguarding consumer data and helping businesses steer clear of legal trouble.
Act I: Vendor Management and Data-Processing Addendums
Every business relies on vendors, cloud providers, marketing platforms and payment processors, but not every business realizes that these relationships can trigger privacy law obligations.
Under a plethora of state privacy laws, including the California Consumer Privacy Act (CCPA) and its amendment, the California Privacy Rights Act (CPRA), sharing personal data with vendors without proper contracts can be considered a “sale” or “sharing” – triggering consumer opt-out rights. In other states, similar laws emphasize consumer opt-out rights with respect to targeted advertising.
To stay compliant, businesses must:
- Conduct due diligence to assess vendor risk, capabilities and access to personal data.
- Classify vendors correctly as service providers, contractors or third parties.
- Execute Data Processing Addendums (DPAs) that include statutorily required terms.
- Limit liability by ensuring vendors are contractually bound to comply with privacy laws.
- Ensure vendors have security breach incident response protocols and timely notification procedures.
These contracts are not mere formalities – they are shields that protect your business from downstream violations.
Act II: The Chain of Data
Think of personal data like a baton passed from one “runner” (entity) to another. From collection to processing to storage, each handoff must be documented and justified. This “chain of data” is scrutinized under privacy laws, especially when data is transferred across borders or used for profiling and targeted advertising.
Businesses must map their data flows and understand:
- where data originates and where it goes;
- who has access and under what conditions;
- for what purposes the data is being processed;
- who determines how and why the personal data is processed, with clarity as to each party’s role regarding the data;
- whether any transfers constitute a “sale,” “sharing” or “targeted advertising” under applicable laws; and
- how long data is retained, and whether data retention aligns with a business’ legal and regulatory obligations.
Businesses need to further build on their data-mapping efforts by developing internal processes capable of responding to privacy inquiries and consumer privacy requests. There should be a clear, documented procedure for receiving, verifying and responding to these requests within required timeframes.
Businesses should account for how individuals can submit requests, such as through a dedicated webform, email or account settings. It’s also important to designate a team or individual to oversee the process, track and log requests, protect against unauthorized disclosures, and use automated tools that are tested and validated.
Without this clarity and proper internal procedures, companies risk non-compliance and enforcement actions, as seen in high-profile cases like the Sephora settlement under the CCPA.
Act III: Data Privacy Impact Assessments
Data Privacy Impact Assessments (DPIAs) are the unsung heroes of privacy compliance. Required under various laws – such as the Colorado Privacy Act and Virginia’s Consumer Data Protection Act – these assessments evaluate the risks associated with processing personal data, especially when there’s a heightened risk of harm.
A DPIA should:
- Identify the purpose and scope of data processing.
- Assess potential risks to individuals.
- Evaluate the necessity of data processed and the proportionality of security and data protection measures.
- Recommend safeguards to mitigate those risks.
- Include approvals from various stakeholders.
- Be updated when introducing the use of or deployment of new tools or platforms such as artificial intelligence.
Conducting DPIAs is not just about compliance – it’s about demonstrating accountability and foresight.
Act IV: Cookies, Pixels and Consent Management
The curtain rises on your website, and the first thing users see is often a cookie banner (or lack thereof). But what lies behind the curtain and how the “actors” behave backstage is key.
Cookies and tracking pixels are powerful tools for analytics and advertising, but they collect vast amounts of personal data. Under most current privacy laws, businesses must:
- Clearly disclose tracking technologies.
- Configure cookie consent tools to be user-friendly, avoid manipulative dark patterns and meet jurisdictional requirements.
- Obtain valid consent before deployment or offer certain opt outs, depending on the user’s location.
- Honor user preferences, including universal opt-out browser-based signals like Global Privacy Control (GPC).
Failure to manage these tools properly can result in costly enforcement actions and reputational damage.
Final Act: Keeping the Script Updated
Privacy laws evolve rapidly. States like California, Colorado, Connecticut and Minnesota have enacted or proposed new regulations, and state and federal agencies like the Federal Trade Commission are stepping up enforcement. Businesses must treat privacy policies, vendor contracts and internal procedures as living documents to be updated and enhanced over time.
Best practices include:
- At least annual reviews of privacy policies and notices.
- Regular audits of vendor relationships and data flows.
- Annual awareness training so employees understand and adhere to privacy obligations.
- Cross-departmental input involving IT, legal, security and marketing to catch any privacy blind spots.
- Proactive updates in response to legal changes.
Encore: Why It Matters
Privacy compliance is not just a legal obligation – it’s a strategic advantage. By managing what happens “behind the curtain,” businesses can build consumer trust while also reducing legal risk.
If your business needs help ensuring its privacy program is “ready for the spotlight” (e.g., navigating this complex landscape with tailored solutions that align with business goals), please contact Chiara Portner or Bushra Samimi, or your regular Lathrop GPM attorney.