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Data processing agreements are critical to running a legally compliant business in a digitally encrypted world. Passed in the European Union in 2016, the General Data Protection Regulation (GDPR) set a new tone when it comes to protecting consumer data and privacy throughout the world. These laws continue to span reach throughout the world as other countries and states enact separate laws and requirements.
You need data processing agreements for consumers if you:
- Have a website
- Collect customer data
- Make sales online
As you can see, these rules affect a large majority of the world. Learn everything you need to know about data processing agreements by continuing the article below.
What is a Data Processing Agreement?
A data processing agreement, also called a DPA, is a legal contract between a data controller and a data processor. They regulate the use of consumer data by companies, specifically how it is processed. In essense, the data processor promises to utilize personally identifiable data (PII) according to the terms laid out in the data processing agreement.
If your website collects data from people living in locations with these rules, then your website processing agreements and data processing methods must be compliant with them.
Common types of company websites that should have data processing agreements include:
- Online retailers
- Internet marketers
- Online service providers
- Professional services firms
- B2B companies
- Financial institutions
- Technology firms
- Medical providers
If you run a large company, you will need to hire a data protection officer (DPO) to oversee and enforce your data privacy policies and data processing agreements. The internet is rife with the opportunity to expose your customer’s data, which can land your company in legal trouble with local authorities.
Avoid making this mistake by writing a personalized data processing agreement for your company while having the appropriate safeguards in place to monitor compliance.
Here is an article about data protection officers (DPO).
Key Terms in a Data Processing Agreement
Data processing agreements, like all contracts, contain key terms and provisions that help both parties understand their rights and responsibilities. In the case of a data processing agreement, the consumer, or the data control, must agree to the company’s or data processor’s terms to use their website or application.
The key terms in a data processing agreement include:
- Subject matter
- Data used
- Data categorizations
- Rights and obligations
- Rights if a data breach occurs
These rights and obligations may vary according to state, industry, country, and company type. When there are numerous variables involved with a contract, it is essential that you consult with privacy lawyers to help ensure that they are objective-oriented, compliant, and enforceable. Otherwise, you could leave yourself exposed to fiduciary liabilities in the future.
Why You Need A Data Processing Agreement
Your company needs a data processing agreement to remain compliant with a jurisdiction’s relevant laws. If you do not have these agreements in place and utilize consumer data, you could face significant penalties. While legislation is forthcoming slowly, a few noticeable places are enacting strict measurements.
DPAs and the GDPR
The General Data Protection Regulation (GDPR) summaries how companies must process, store, and use customer data. These regulations are contained within Article 28 of the GDPR text enacted by the European Union (EU).
Counties in the EU include:
- Republic of Cyprus
- Czech Republic
Regardless of where your target audience resides in the EU, DPAs are an essential website component across many business types and industries. Data controllers also have specific legal protections.
Ensure that your data processing agreement addresses the following rights:
- Right to opt-out
- Right to be informed
- Right to disclosure
- Right to deletion
- Right to equal services and prices
Lawmakers have authorized the Data Protect Authorities to impose fines of up to €20 million or 4 percent of global turnover annually, whichever of the two is greater, for GDPR violations. Work with a team of legal and technological professionals to help you create an agreement and process that helps you accomplish your company objectives while remaining compliant within the EU.
DPAs and the CCPA
On the other hand, the California Consumer Privacy Act (CCPA) is the state’s ePrivacy directive that outlines how companies can use consumer data, including tracking browsers and data encryption requirements. These rules apply to first and third-party services providers and retailers.
Data Processing Agreements and Small Businesses
Small business owners stretch their budgets and may wonder if having data processing agreements are really necessary. They are generally not exempt from meeting data processing agreement requirements. However, some geographical regions may have more lax regulations in your area.
Other Reasons to Not Use Data Processing Agreements
You also do not need to have a data processing agreement if your target market is not located in a place with such requirements. Always speak with internet lawyers in your state to determine if your small business needs to utilize data processing agreements.
Why You Should Get Started Early
We will likely see continued legislation crop up throughout the United States and the world. It may not be a bad idea to get a jump on the practice now while observing good data processing ethics. Your early adopter and tech-savvy customers are sure to take note of your above-and-beyond efforts.
Image via Pexels by Soumil Kumar
Writing A Data Processing Agreement
It’s essential that you write a data processing agreement that serves its intended purposes. However, the terms and conditions you write must also remain compliant with local, state, federal, country, and industry requirements depending upon your business. Use a methodical approach to ensure that you obtain the desired result.
Follow these steps when writing a data processing agreement:
- Step 1. Determine what customer data is essential
- Step 2. Decide upon how long you need to store/process the data
- Step 3. Write down how you plan to use the data in your own words
- Step 4. Finalize this information with key company stakeholders
- Step 5. Schedule an initial intake with a privacy lawyer
- Step 6. Work with the lawyer you hired to finalize the policy
Get Help with a DPA
Online agreements, like Data Processing Agreements, are best left to experts that understand the way browsers, software, and online marketing works, as well as being familiar with global data privacy laws. Post a project on ContractsCounsel’s marketplace to get bids from vetted technology lawyers that can help.
Meet some of our Data Processing Agreement Lawyers
Firm rated best ADR firm for Wisconsin and won an award for cultural innovation in dispute resolution from acquisition international magazine in 2016 and it was rated "Best of Brookfield" by Best Businesses in 2015. Attorney Maxwell C. Livingston was rated 10 best in Labor & Employment Law by American Institute of Legal Counsel and 40 Under 40 by American Society of Legal Advocates for 2016; he also won 10 Best by American Institute of Family Law Attorneys. He is licensed in Wisconsin in all state and federal courts, and in the 7th Circuit Court of Appeals, wherein he won a landmark decision in McCray v. Wielke.
Richard is a wizard at taking on bureaucracies and simply getting the job done. His clients value his straight-forward counsel and his ability to leverage a top-notch legal staff for efficient and effective results. Richard is a professional engineer, professor of law, and has been named among the top 2.5% of attorneys in Texas by the Super Lawyers®. When he is not driving results for his clients, Richard can be found with his small herd on his Texas homestead.
Experienced attorney and tax analyst with a history of working in the government and private industry. Skilled in Public Speaking, Contract Law, Corporate Governance, and Contract Negotiation. Strong professional graduate from Penn State Law.
I am an attorney admitted in NY, with over 6 years of experience drafting, reviewing and negotiating a wide array of contracts and agreements. I have experience in Sports and Entertainment, Real Estate, Healthcare, Estate Planning and with Startup Companies. I am confident I can assist you with all of your legal needs.
Rishma D. Eckert, Esq. is a business law attorney who primarily represents domestic and international companies and entrepreneurs. A native of both Belize and Guyana, she remains engaged with the Caribbean community in South Florida: as a Board Member and General Counsel for the Belize American Chamber of Commerce of Florida, and Member of the Guyanese American Chamber of Commerce. She holds a Bachelor of Laws degree (LL.B.) from the University of Guyana in South America, a Master’s degree in International and Comparative Law (LL.M.) from Stetson University College of Law in Gulfport, Florida, and earned a Juris Doctor degree (J.D.) from St. Thomas University School of Law in Miami, Florida. Licensed to practice in the State of Florida and the Federal Court in the Southern District of Florida, Mrs. Eckert focuses her passion and practice on domestic and international corporate structuring and incorporation, corporate governance, contract negotiation and drafting, and trademark and copyright registrations.
Mark A. Addington focuses his practice primarily on employment litigation, including contractual disputes, restrictive covenants (such as non-competition, non-solicitation, or confidential information restrictions), defense of wage and hour, harassment, retaliatory discharge, disability, age, religion, race, and sex discrimination.
Founder and Managing partner of Emerald Law, PLLC, a business law firm specializing in contract drafting and corporate transactions. Kiel worked as in house counsel for a variety of companies before launching his own firm, and most recently served as the Chief Legal Officer for an international private equity firm.