Data Processing Agreement

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
• Affiliates
• 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
• Duration
• Purpose
• 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:

• Austria
• Belgium
• Bulgaria
• Croatia
• Republic of Cyprus
• Czech Republic
• Denmark
• Estonia
• Finland
• France
• Germany
• Greece
• Hungary
• Ireland
• Italy
• Latvia
• Lithuania
• Luxembourg
• Malta
• Netherlands
• Poland
• Portugal
• Romania
• Slovakia
• Slovenia
• Spain
• Sweden

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.

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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.

Data Processing Agreements vs. Privacy Policy

There are significant differences between data processing agreements vs. a privacy policy . Data processing agreements outline how you process the customer’s data to prevent technological insecurities, while the privacy policy lets customers know what you do with their data in general.

Example of Data Processing Agreements vs. Privacy Policy

For example, in a data processing agreement, you may disclose that a third party, such as Google, will process your data when collecting email addresses for newsletters. You do not necessarily need to disclose this specific information in your privacy policy.

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

The most practical business approach for writing a data processing agreement is by speak with technology lawyers . They have the legal experience and digital knowledge you want when drafting your data processing agreements. Your attorney can also help you draft other data processing agreement documents, including a privacy policy, terms of use agreement, terms of service (ToS) agreement, and acceptable use 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.