Data Processing Agreements in 2023 Data Processing Agreements in 2023
Businesses and organizations rely on computer technology to handle clients’ data. While this makes processing more efficient, it also comes with... Data Processing Agreements in 2023

Businesses and organizations rely on computer technology to handle clients’ data. While this makes processing more efficient, it also comes with its difficulties — one of which is the issue of trust. This is why companies need data processing agreements and keep up with the latest information about them.

Data privacy is a field of law that is constantly evolving and changing. People are understandably concerned when they ask a third party to handle their personal information. Changes are made to DPA agreements whenever a new technology that can take data is discovered.

What Is a Data Controller?

In a data processing agreement, the term “data controller” refers to the company requesting to use the client’s data. Controllers decide how and when their client’s data is being used. They are ultimately responsible for processing the data and are held accountable by the GPA agreement if it is misused.

Organizations acting as controllers can ask another party to join them as a joint controller. The second controller enjoys the same privileges as the central controller and has the same responsibilities.

What Is a Data Processor?

A “data processor” is a third-party service provider that regulates the use of the client’s data by the data controller. The data processor is responsible for processing the data on behalf of the controller per their contract. A contract between a data processor and the data controller must include what will happen to the data of the client once the contract is fulfilled or terminated.

Data processors typically include third parties that offer services such as data and cloud storage, IT solutions, and data security. This designation also includes companies that have partnered with the data controller and helped them process clients’ data.

Why Are Data Processing Agreements Important?

For one, they protect businesses and clients from any penalties incurred by data security laws. In particular, the European Union created the General Data Protection Regulation (GDPR) laws to defend people’s rights regarding their data.

Companies that operate within or do business with the European Union must be familiar with the GDPR laws if their operations involve handling their client’s data. Among other things, GDPR requires companies to have a DPA agreement with their clients.

Data processing agreements outline the purpose and duration of processing activities that involve a client’s data. It requires companies to specify the nature of the data usage and what kind of individuals the data belongs to. A DPA agreement is legally binding — any failure to comply with the conditions set in the DPA will invoke severe penalties.

How DPA Agreements Will Affect Businesses in 2023

As GDPR laws become more enforced by governments, businesses must comply or face penalties. These include a fine which can amount to hundreds of millions of dollars depending on the company and the severity of the infraction. Interest in GDPR and DPA agreements will only increase as the public becomes more aware of data privacy issues.

While GDPR is generally limited to the EU, the laws are also gaining traction in the U.S. Five states — California, Colorado, Connecticut, Utah, and Virginia — will begin enforcing new GDPR-inspired statutes starting in 2023. Additional states are very likely to follow suit in the coming years.

These new statutes will include laws and regulations that apply to many business sectors, including the financial and medical sectors. Currently, U.S. law allows companies to collect user data even without permission. However, as the issue of data privacy becomes more pronounced, the government is enacting new regulations to control business data collection.

Data Processing Agreements Might Be the Future

As companies rely more on computer technology to collect client data, the issue of data privacy is one that businesses have to be wary of. With GDPR becoming more prevalent and new data privacy regulations coming to more countries, it is more important than ever to understand what data processing agreements do and how to comply with them.

Shannon Flynn

Shannon Flynn

About the author: Shannon Flynn is a tech writer and Managing Editor for ReHack.com. She covers topics in biztech, IoT, and entertainment. Visit ReHack.com or follow ReHack on Twitter or to see more of Shannon’s posts.