The impacts of Europe’s GDPR on US companies

Here are four key misconceptions surrounding the impact of the newly implemented GDPR regulations in Europe on US companies:

1) “If I don’t have operations in Europe, it doesn’t apply.”

Wrong. Any US company offering goods or service to EU residents - i.e. anyone with a website - is likely required to comply.

2) “If I am covered by the GDPR I have to appoint a Data Protection Officer (DPO) in the EU.” 

Wrong.  A US company’s obligation to appoint a DPO, or even a designated representative, is a complex and highly fact-dependent analysis.

See also:

• 10 reasons why North American companies should care about Europe’s GDPR

• The affects of GDPR on North American companies

• 73% of US and Canadian firms haven’t prepared for GDPR

3) “If I am not covered by GDPR I don’t have to update my Privacy Policy.”

Wrong. A lot has happened in the US since companies started adopting boilerplate Privacy Policies without really understanding what they were committing to do, and not to do.  Regardless of whether you are covered by GDPR, basic principles of good information governance mandate a careful look at your privacy policy and terms of use on your website.  The biggest risk: overstating who you share your data with.  Virtually all websites employ third-party data analytic services, which often open the door to opaque gathering,mining, and trading of a person’s data in ways the website owner may not understand at all - and often conflicts with commitments made to customers and website visitors.

4) “If I’m a small to medium-sized US company, there’s virtually zero chance of any enforcement action against me so I can just wait until we understand better how it’s all going to work.”

In the long term, wrong. EU regulators will likely target the larger companies, especially US tech companies, at first but GDPR allows private citizens to lodge complaints, and even bring class actions. All it will take is one disgruntled customer or employee whistle blower to spotlight someone who thought they could fly below the radar for a few years.  If your appetite for risk is voracious, you might avoid detection for a while. But if you completely ignore GDPR and get caught, the financial exposure to penalties and long-term scrutiny could be breathtaking.

Robert Cattanach, Partner, Dorsey & Whitney