In an increasingly data-driven world, privacy is no longer a niche concern; it’s a legal obligation for many companies. Despite the rise of data privacy regulations, many organizations remain hesitant to invest in comprehensive compliance programs. Whether due to budget constraints, perceived complexity, or an underestimation of risk, this reluctance can expose businesses to serious legal and financial consequences. As data privacy laws expand in scope and enforcement, failing to act is not only risky; but could be a costly mistake.
While major corporations with global footprints often maintain robust data privacy compliance programs and dedicated teams, small to mid-sized businesses frequently fall short. Many operate under the mistaken assumption that regulations like the General Data Protection Regulation (GDPR), the California Consumer Privacy Act (CCPA), as amended by the California Privacy Rights Act (CPRA), and newly enacted laws in states such as Colorado, Virginia, Kentucky, Indiana, and Texas[1] apply only to tech giants or those who collect immense amounts of data, like the Googles, and Metas of the world.
This mindset can be dangerous. Many state-level data privacy laws set compliance thresholds based on the volume of personal data collected, not revenue alone. For example, the Montana Consumer Data Privacy Act, applies to businesses that process data for just 50,000 or more individuals annually, an easy threshold for many companies to unknowingly cross through website visits, or simple e-commerce operations.[2] In some states, such as Texas and Nebraska, the only threshold is whether a company does business with residents of that state.[3]
Even when businesses are aware of these data privacy laws, the implementation of a full compliance program is often viewed as a cumbersome and costly exercise. Legal counsel, data audits, updated policies, and training programs may feel like luxuries until the fines and lawsuits start piling up. Many companies assume they won’t be targeted, but the rise of “testers” has made that assumption increasingly risky. These individuals or groups actively seek out privacy violations with the intent to file lawsuits or class actions. They scrutinize websites and privacy policies for issues such as cookie misuse, improper opt-outs or opt-ins, and failures to honor consumer data rights. Even businesses that consider themselves low risk due to their size can be blindsided by a class action triggered by an outdated privacy policy or a non-compliant tracking pixel.
In many jurisdictions, individuals have a private right of action, allowing them to sue companies directly over privacy violations. Some lawsuits have resulted in multi-million-dollar settlements, even when the violations were unintentional.
Data privacy laws have teeth. Under the GDPR, penalties can reach up to four percent (4%) of a company’s annual global revenue or €20 million, whichever is greater.[4] In the U.S., while state-level fines are generally lower, they can still be significant. For example, California’s law allows for penalties of up to $7,500 per violation per individual.[5] With large datasets, those numbers can add up quickly.
Data privacy isn’t going away; it’s expanding. Companies that fail to develop comprehensive compliance programs are not just flirting with fines from regulators; they’re leaving themselves wide open to opportunistic lawsuits and class actions. Compliance is no longer a luxury; it’s a necessity and establishing a comprehensive program does not have to be overly expensive or disruptive.
A strong starting point includes:
- Conducting a data mapping audit,
- Updating privacy policies and cookie banners, and
- Training employees on basic data handling practices.
Creating a data privacy compliance program is like installing a lock on your digital front door. It keeps the bad guys, regulators, and testers away. It’s your first line of defense against legal trouble, and steps, even small ones, toward compliance can go a long way.
[1] https://iapp.org/resources/article/us-state-privacy-laws-overview/
[2] https://www.cliffordchance.com/insights/resources/blogs/talking-tech/en/articles/2023/12/the-montana-data-privacy-law-an-overview.html
[3] https://pro.bloomberglaw.com/insights/privacy/state-privacy-legislation-tracker/#states-with-comprehensive-data-privacy-laws
[4] Fines / Penalties - General Data Protection Regulation (GDPR)
[5] California Privacy Protection Agency Announces 2025 Increases for CCPA Fines and Penalties
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