United States: How The European Union's New General Data Protection Regulation Will Impact U.S. Businesses That Target EU Consumers

The European Union's new General Data Protection Regulation (GDPR), which takes effect on May 28, 2018, impacts every business that markets and sells goods or services to EU residents online, even if the company has no physical presence within the EU. The GDPR imposes extensive obligations on any U.S. business, including small and medium-sized enterprises (SMEs), which directly or indirectly collects or processes EU consumers' personal data. Economic penalties for non-compliance can be severe.

This includes any U.S. business that targets EU consumers directly or through third parties (such as marketing firms), including e-commerce companies; hotels, resorts and travel agencies; and museums, art fairs and galleries that have EU clients and mailing lists.

How should you prepare? In this alert, our Information Governance team compares GDPR to the EU-U.S. Privacy Shield framework it replaces; and outlines ten of GDPR's key provisions for U.S. businesses.

Background on the Privacy Shield Framework

In 2015, the Court of Justice of the European Union invalidated a longstanding EU-U.S. data privacy "safe harbor" agreement because EU residents weren't afforded the same level of protection they were under EU law. Subsequently in mid-2016, the U.S. Department of Commerce launched the EU-U.S. Privacy Shield Framework, which provides an interim safe harbor for U.S. businesses.

To participate, businesses must be subject to Department of Transportation or Federal Trade Commission oversight – something that already applies to most consumer-facing e-commerce websites and social media platforms – and must certify that their data retention and processing policies comply with EU laws. More than 2,500 businesses are Privacy Shield certified; however, complying with Privacy Shield's requirements can be burdensome, especially for SMEs.

Businesses that fail to comply with the Privacy Shield currently risk FTC sanctions or an investigation by a Privacy Shield panel. In September 2017, the FTC announced the first settlements in three cases, including one against Md7, which manages real estate leases for wireless companies and had falsely represented that it was Privacy Shield certified. The settlement terms are included in a consent decree prohibiting further misrepresentations and requiring long-term reporting and compliance certification. It is likely that the FTC will also exercise its enforcement authority if a US company's privacy policy falsely professes compliance with the GDRP.

GDPR's Privacy and Security Obligations for U.S. Businesses

The GDPR will substantially increase privacy and security obligations with respect to EU resident data transfers, along with potentially draconian penalties well beyond those of the Privacy Shield. Under GDPR, "personal data" is very broadly defined to include a person's name, address, phone and email, as well as their economic, social, cultural, genetic and mental characteristics. Here are ten of GDPR's key provisions, culled from the entire 99-page regulation:

  1. EU individuals from whom personal data is collected (such as in connection with a hotel booking or e-commerce sale) must be provided with detailed disclosures, including the following:
  • the identity and contact details of the company and its data protection officer;
  • the purpose for processing their personal data, as well as the legal basis for processing;
  • the recipients or categories of recipients of their personal data, if any;
  • the period for which their personal data will be stored, or if that's not possible, the criteria used to determine that period;
  • the existence of their right to access, port, amend or erase their personal data; or their right to restrict or object to data processing,
  • in authorized situations, the right to withdraw consent at any time, without affecting the lawfulness of any data processing that occurred before they withdrew their consent;
  • the right to lodge a complaint with a supervisory authority (see below);
  • the right to know whether the provision of their personal data is a statutory or contractual requirement, or a requirement necessary to enter into a contract; and to know whether they're obliged to provide it, as well as the possible consequences of not providing it;
  • the right to know if automated decision-making and profiling tools are being used to analyze or predict their work performance, personal preferences, reliability, behavior, health, location or movement. In cases where these tools can affect their legal rights, meaningful information must also be included about the logic behind using the tools, as well as the significance and envisaged consequences of such data processing; and
  • if the company intends to further process their data for a purpose other than why it was collected, a third-party processor (called a "controller"), shall provide the different purpose and any relevant information prior to processing.
  1. Where personal data is collected based on consent, the company must be able to demonstrate that the consumer has consented to processing his or her data. Processing is defined as any use of personal data once collected, and it can only occur when a business has a legal basis or "good reason" to do so. This would include obtaining prior consent of individuals from whom the data is derived (such as collecting necessary data to complete an e-commerce purchase), the need to enter into a contract (such as an online license agreement or subscription), or compliance with legal obligations.
  1. Companies must implement appropriate technical and organizational measures to ensure that, by default, only personal data that is necessary for each specific purpose is processed. This applies to the amount of data collected, the extent of its processing, and the period of storage and accessibility.
  1. EU residents have a right to be forgotten. This includes a right to have all of their personal data deleted "without undue delay." Companies must also delete data
    "without undue delay" when it's no longer necessary for the reason it was collected or processed. This is subject to limited exceptions, including exercising the right of freedom of expression and information, compliance with a legal obligation (currently limited to EU or EU member states' laws), performance of a task carried out in the public interest; and archiving for scientific, historical research, statistical or public interest, purposes. The company must also take "reasonable steps, including technical measures," to inform controllers that the consumer has requested they erase any links to, or copies of the data. This will require potentially costly changes to a company's IT infrastructure to segregate EU consumer data from U.S. and other unregulated data, and to implement search and recovery tools to access and completely delete all such data on a consumer-by-consumer basis. This could also impose additional liability where controllers retained by a company are not notified of the removal request.
  1. EU residents have the right to obtain copies of all data collected about them, and to require companies to correct any errors.
  1. All personal data must be deleted once a business transaction is completed. However, there is an exception that permits data to be used for a purpose other than which it was originally collected, if the other purpose is not "incompatible" with the original purpose.
  1. Strict data breach rules are imposed. They include a requirement to notify the "supervisory authority" to be designated by each EU member country within 72 hours of a breach affecting residents of such country. Note that 48 U.S. states already have similar notification laws, but they do not apply to EU residents.
  1. EU residents whose rights are violated may file complaints with a designated "supervisory authority" and will have a direct cause of action against non-compliant companies. Initially, that action will be reviewed by the "supervising authority" in the EU country where the person lives or works, followed by a judicial appeal to courts in the same EU country if the person is unsatisfied. How this will enforced against U.S. businesses is not yet clear, but it could subject businesses to liability before EU tribunals and courts. The FTC may also be empowered to enforce non-compliance based on misrepresentations on a company's website.
  1. EU regulators and courts will have significant discretion to impose severe fines. Businesses can be fined a maximum or 4% of their annual global revenue, or €20 million (whichever is greater), for failing to obtain consent to collect and process data, for ignoring consumer requests to delete and port their data, or for transferring personal data outside the EU without appropriate safeguards. For lesser violations, including a failure to maintain records of customer consent or a failure to provide timely notice of a data breach, the maximum fine is 2% percent of annual global revenue, or €10 million (whichever is greater). Fines will be assessed based on a number of factors, including willfulness of a violation, gravity and duration of the violation, any mitigation undertaken by the company or its data processors, prior violations, degree of cooperation with supervising authorities, and adherence to codes of conduct to be established by EU member states.
  1. EU regulators will have additional enforcement power to order remediation and suspend data transfers to the U.S. If U.S. companies use third party data processors or providers based in the EU, this could shut down such operations if there are serious violations.

GDPR's Impact on U.S. Businesses

How all of this will be enforced in the U.S. is yet unknown. The U.S. Department of Commerce and the FTC may reach an agreement with EU regulators on a new safe harbor, as they did with the Privacy Shield. Indeed, the GDPR directs EU authorities to develop international cooperation mechanisms to support the reach of extraterritorial enforcement.

As the May 28, 2018 implementation date approaches, U.S. businesses that do business with EU residents will have to address a wide variety of business and legal concerns, including reviewing and updating their privacy and data security policies and protocols, monitoring U.S. agency compliance and enforcement initiatives, educating employees on GDPR's requirements; and auditing and revising contracts involving data collection, storage, processing and marketing vendors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
Wilson Elser Moskowitz Edelman & Dicker LLP
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Wilson Elser Moskowitz Edelman & Dicker LLP
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions