The European Union (EU)’s General Data Protection Regulation (GDPR) isn’t just a European concern. As GDPR-U.S. interactions become more complex, international businesses (including American ones) must comply with this regulation when handling data from EU citizens. If your company collects, processes, or stores data from the EU or European Economic Area (EEA)—including Iceland, Norway, and Liechtenstein—GDPR compliance is a legal requirement.
Navigating GDPR from a U.S. perspective can feel overwhelming, especially for its strict data privacy and accountability guidelines. Regulatory changes like the EU Cyber Resilience Act require staying current with evolving compliance requirements.
Compliance is more manageable with the right understanding and tools. This article will explain what GDPR means for U.S. companies, key requirements, and actionable steps to ensure your organization meets these standards.
What Is GDPR?
GDPR is one of the world’s most influential and far-reaching data privacy laws. It became directly applicable in all EU member states in 2018. These regulations aim to give individuals greater control over their personal information and give organizations responsibility for collecting, processing, and storing that information.
GDPR focuses on seven key principles:
- Lawfulness, fairness, and transparency
- Purpose limitation
- Data minimization
- Accuracy
- Storage limitation
- Integrity and confidentiality
- Accountability
This means businesses must process data lawfully and transparently, limit collection to what’s necessary, and store data accurately and safely.
For individuals, GDPR introduces fundamental rights, such as:
- Right to Access: People should always be able to request copies of personal data.
- Right to Erasure: Organizations will delete personal data upon request.
- Right to Object: Users can challenge how data is processed, especially for marketing purposes.
Does GDPR Apply to U.S. Companies?
GDPR for U.S. companies applies if your organization handles the personal data of individuals in the EU or EEA. Unlike location-specific standards like the California Consumer Privacy Act, GDPR has an extraterritorial reach.
The GDPR applies to any organization, regardless of location, that:
- Offers goods or services to EU or EEA residents (even if no payment is involved)
- Monitors the behavior of individuals in the EU or EEA, including tracking website activity or analyzing user preferences
This means that even U.S. companies have to comply if they handle EU data. It’s not about where your business operates, but whose data you’re handling and how. For example, if you run an e-commerce store in California and someone from Germany purchases your product, GDPR kicks in. Similarly, if your website uses cookies to track visitors from the EU or EEA, you’re subject to GDPR compliance.
The key factor is whether your business targets EU or EEA residents. This includes offering goods or services in EU or EEA languages or currencies, mentioning the countries in marketing, or tracking these users online.
Having occasional contact with EU or EEA residents doesn’t automatically exempt you from GDPR. Assume that these standards apply unless you can definitively demonstrate that you are not targeting these individuals.
It’s also worth noting that GDPR applies to U.S. citizens while they’re physically in the EU or EEA. For example, if an American tourist in Paris uses an app or makes an online purchase during their stay, their data falls under GDPR protection.
The key takeaway: If EU or EEA residents' data flows through your systems in any meaningful way, GDPR compliance is mandatory.
GDPR Requirements for U.S. Companies
If your company is subject to GDPR, you must meet several legal, operational, and technical requirements. Here’s what to do:
Determine Scope of Compliance
The first step is to understand when GDPR applies to you. Conduct a scope assessment to identify your obligations and create a focused and effective compliance strategy.
Audit Data Processing Activities
You can’t protect what you don’t understand. Perform a data audit to document every stage of your data processing activities. This includes identifying what personal data you collect, where it’s stored, who has access to it, and how it’s shared. Pay close attention to third-party vendors that may process data on your behalf and make sure they meet GDPR standards, too.
Establish a Legal Basis for Processing Data
Under GDPR, every data processing activity must have a legal basis to make sure you’re fulfilling general legal obligations.
These bases include:
- Explicit user consent
- Contractual necessity
- Legitimate interest
- Compliance with legal obligations
- Protection of interests
Update Privacy Policies and Notices
GDPR requires informing users about their rights to access, modify, and delete their data, so privacy policies and notices must be transparent and accessible. Clearly outline what data you collect, how you use it, and how users can exercise their rights.
Appoint a Data Protection Officer
If your company processes large volumes of data, handles sensitive data, or monitors individuals systematically, you may need to appoint a Data Protection Officer (DPO). The DPO ensures compliance, serves as a point of contact with regulatory authorities, and oversees data protection policies.
Designate an EU Representative
Non-EU businesses processing EU/EEA residents' data have to appoint an EU-based representative. This individual is the primary contact point for data protection authorities and EU data subjects.
This requirement doesn’t apply if EU data processing is occasional, doesn’t involve large-scale processing of sensitive data, and is unlikely to result in a risk to individuals' rights and freedoms.
Implement Data Protection Safeguards
Technical and organizational safeguards—like implementing encryption, pseudonymization, and access controls—are non-negotiable. Regular security audits and vulnerability assessments help identify and mitigate risks.
Prepare for Data Breaches
GDPR mandates swift action in the event of a data breach. Companies must notify EU/EEA authorities within 72 hours and inform affected users if their rights are compromised.
GDPR Checklist for U.S. Companies
Achieving GDPR compliance is about taking clear, actionable steps to meet them. Here’s a practical checklist to guide your compliance journey:
Audit EU/EEA Personal Data
- Map out all EU/EEA personal data flows within your organization.
- Determine what information you gather, why, where you keep it, and who can access it, including third-party vendors.
- Maintain an up-to-date record of processing activities (ROPA) to demonstrate compliance
Update Privacy Policies and Notices
- Make sure your privacy policy clearly explains data collection, processing, and storage practices.
- Make the privacy policy easily accessible on your website.
- Include user rights (access, rectification, deletion) and instructions for exercising them.
Document Your Legal Basis for Data Processing
- Identify the legal basis for every data processing activity.
- Maintain clear documentation justifying each legal basis.
- Regularly review and update legal bases as business operations evolve.
Review and Secure Third-Party Agreements
- Conduct an audit of third-party vendors handling EU/EEA data.
- Ensure data processing agreements (DPAs) are in place and align with GDPR requirements.
- Verify that the vendors you work with implement adequate technical and organizational safeguards.
Enable User Consent Management
- Implement a consent management system that allows users to grant, refuse, or withdraw consent easily.
- Ensure consent records are logged and timestamped for auditability.
- Avoid pre-checked boxes and default consent settings.
Assess the Need for a Data Protection Officer
- Review GDPR criteria to determine if your organization requires a DPO.
- Document the decision (even if a DPO isn’t needed).
- If required, appoint a qualified DPO to oversee compliance efforts.
Designate an EU Representative
- Identify if your organization needs an EU-based representative.
- Choose a qualified individual or organization to act as your GDPR liaison.
- Document their responsibilities and ensure clear communication channels.
Implement Data Protection Safeguards
- Apply encryption, pseudonymization, and access controls to protect personal data.
- Schedule regular security audits and vulnerability assessments.
- Implement data retention policies to avoid unnecessary storage.
Prepare a Data Breach Response Plan
- Develop a documented data breach response plan with clear escalation steps.
- Ensure your team understands the 72-hour notification requirement for GDPR breaches.
- Test the plan regularly to identify and address gaps.
Verify Cross-Border Data Transfer Compliance
- Use GDPR-approved mechanisms like standard contractual clauses (SCCs) for data transfers.
- Verify third-party vendors adhere to GDPR data transfer requirements.
- Keep documentation of all cross-border data transfer agreements.
Train Employees on GDPR Best Practices
- Conduct regular training sessions on GDPR principles and responsibilities.
- Make sure all team members understand how to recognize and report data breaches.
- Foster a culture of privacy and accountability throughout the organization.
Achieve GDPR Compliance With Legit Security
Navigating GDPR compliance as a U.S. company involves auditing data flows, securing third-party agreements, ensuring legal bases for processing, and preparing for potential breaches. As with other evolving standards, like the PCI DSS, compliance requires an ongoing commitment to transparency and strong data protection practices.
Legit can map your application security guardrails to GDPR regulations and identify security gaps to obtain compliance. We then provide real-time monitoring and alerts on compliance violations.
Schedule a demo to learn how you can use Legit Security to address compliance gaps, mitigate risk, and foster customer trust—all while simplifying the path to ongoing GDPR compliance.