Owning a business inevitably means you’ll have information in the cloud, on a website, or potentially use other online services. Your customers entrust you with sensitive data, such as credit card numbers and personal details, and you’re responsible for keeping that info safe from cyberattacks.
The 2022 Allianz Risk Barometer surveyed 2,650 risk management experts across 89 countries and territories. For the second time in the survey’s 11-year history, cybersecurity was the number-one concern, with 44% of respondents citing worries about the growing threat of breaches.
Companies would be wise to examine their legal obligations and ensure they do everything possible to protect essential data with the threat so high.
Federal Regulations
Businesses located in the United States have been encouraged to protect consumer data, but it’s not really regulated. However, the DOJ now has a Civil Cyber-Fraud Initiative, which applies the False Claims Act to government contractors. In a nutshell, if you somehow gain resources or funds from the federal government, ensure you’re in compliance or risk numerous penalties, including losing profitable contracts.
The United States also has some regulations in place and has had for years, such as the FIC, FCC, and SEC, to ensure media and other outlets treat citizens fairly. Most regulations apply to government agencies and their contractors, such as FISMA Reform. Many are also familiar with HIPAA, which directs how any company handling personal health information must secure that data.
National Guidelines
Most small business owners have heard of the General Data Protection Regulation (GDPR) instituted by the European Union (EU). Although the regulations are expansive, in a nutshell, if you do business with a citizen of the EU, you are under an obligation to protect their data.
Not safeguarding personal details and explaining how you store and use that information may make you subject to hefty fines. Some of the suits by the EU are still playing out in court against big companies, but nothing is limiting them from coming after a small corporation as well.
Local & State Cybersecurity Legalities
Every state has different laws and regulations. Brands in the United States first fall under their local and state municipalities when considering the steps they must take to protect data.
For example, those who live in California fall under the California Consumer Privacy Act. The measure follows citizens across state lines, so the legislation still applies if someone from California buys a product from someone in Indiana. A few other states have similar regulations, such as Massachusetts with its 93H and Illinois’ Personal Information Protection Act.
You can be almost certain other states will follow. Even if they don’t, and you do business with anyone in those states, you must comply.
Industry-Specific Standards
Some industries have their own lists of regulations, and you must comply with them or risk losing licensing and recognition.
For example, health care companies must comply with all of HIPAA’s regulations to the nth degree. For example, suppose a doctor’s office uses a third-party provider to offer telemedicine. In that case, they must ensure the provider also adopts HIPAA compliance, or they risk as much as a $50,000 fine per violation up to $1.5 million per year. In some cases, criminal charges and jail time result.
The financial industry has similar regulations meant to help protect consumer money and prevent fraud. Institutions failing to take the appropriate security measures may incur hefty fines. Don’t assume you’re safe if you aren’t in health care or finances, though. Regulations and acts can impact nearly any type of business, including e-commerce and local mom-and-pop shops.
How to Avoid Legal Issues
Although it’s impossible to see every potential issue that might arise, there are a few things you can do to protect your business from fines and lawsuits:
● Invest in security. Train employees on phishing schemes, install anti-virus software and run regular scans.
● Investigate third-party providers. Ensure they take appropriate precautions with sensitive data, as you could be responsible for their mistakes.
● Have a reason for collecting data and only keep it as long as you need it.
● Delete old files and change passwords frequently.
● Consult a legal specialist and cyber security team for up-to-date advice.
The best way to avoid a problem is to take the necessary steps to safeguard information. Once data gets leaked, you have to go into damage control mode, which is uncomfortable.
Breathe and Keep Growing
All of these regulations, laws, and concerns may have you worried about the worst happening. Take time to breathe. Assuming you’ve taken a few precautions, it’s unlikely you’ll have a data breach. If you do, then have a plan in place to handle the situation. Most people don’t incur fines or criminal charges. Do everything humanly possible to follow the guidelines, and you’ll come out on top and be able to focus on growing your business.
