Data Privacy Laws: Their Impact on Small Business Operations

With the number of Internet users growing by the day, more people become aware of data privacy. However, businesses, especially those in the IT sector, are the ones that are more concerned about privacy and will go to any lengths to protect their data from falling into the wrong hands.

Data is like gold to these businesses, and so, they have adopted various models to protect it. With this, they have also revolutionised key sectors that use large amounts of data to conduct business.

However, in recent times, an increase in breaches has led businesses, even the small-scale ones, to tighten security measures by relying on cutting-edge technologies.

What is Data Privacy?

Some information is more critical than others. For example, while you may not mind sharing your name with a stranger, there are other pieces of information that you shouldn't be sharing. For example, if you want to open a bank account, you must share much more than just your name.

Data privacy in the digital era is about protecting critical information, such as Personally Identifiable Information (PII) or even Personal Health Information (PHI). Such information may include medical records, financial records, bank accounts, and credit card numbers, and even other sensitive information like the full names, addresses, and birthdates.

Similarly, critical information could include employee and customer PIIs and other crucial information such as research and development or even financial data when it comes to businesses.

Businesses should make sure that sensitive data doesn't get into the wrong hands. For instance, a breach in the security of a government agency can leak classified or top-secret information into the enemy's hands. Likewise, when data breaches occur in large corporations, it could mean that a competitor has hold of sensitive information related to that company.

What are Data Privacy Laws?

Every country has a legal framework for protecting sensitive information. Such legal frameworks govern how that country gathers data and how it stores and disseminates that information. If you want information regarded as sensitive, you must follow all the rules and protocols set up to protect it.

Most pieces of information are legally bound, and you may need to go through stringent processes to get them.

The laws governing data privacy are different for each country. For instance, although a country like India doesn't have data protection laws yet, it still protects sensitive information with the help of the Information Technology Act (2000).

Also, in 2011, the Government put forth the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules under Section 43A of the Information Technology Act.

According to these rules, companies need additional requirements to collect and disclose sensitive personal data. Although not in line with the GDPR and the Data Protection Directive system adopted by the EU, these rules are similar to them in many ways.

What is the Data Protection Act, and How Does it Affect Small Businesses?

The Data Protection Act, 1998, protects sensitive information of businesses and governments by imposing rules on sharing such data or information. The Act has several laws that you must follow when you collect and share information.

These rules, or Data Protection Principles, come from the Information Commissions Office responsible for judging how organisations use sensitive data and whether they are responsible enough when collecting and sharing such data.

Many organisations, even the large ones, deal with a ton of data every day. For this reason, they must find ways to audit large chunks of redundant or obsolete data. There are three key reasons why they should do this:

• Older data is out of date and is prone to errors such as passing false information.
• Documents containing older data are more difficult to verify than those that consist of new information.
• It is hard to find personal data among a pile of useless information.

Considering all these aspects, it becomes imperative for companies, both large and small, to update information regularly and do away with older data that could cause errors in sharing information and protect sensitive data from leaking into the hands of a competitor.

What is the Personal Data Protection Act?

The Personal Data Protection Act came into being in 2019 and governs personal data or information collection and processing. It also regulates the sharing of such information across borders. Some other notable features of this Act include:

1. Data Processing

The Act governs how the Government and other organisations collect, process, store, and share personal and sensitive information. Besides the Government, the Act also oversees how other entities such as data fiduciaries or processors that are not present within the Indian territory collect and process information related to different businesses and activities in the country.

2. Personal Data Types

The Act categorises personal data into three types: Personal Data, Sensitive Personal Data, and Critical Personal Data.

Personal data may include information such as the characteristics, traits, and attributes of an individual that various entities, including the Government, collect through online or offline modes.

Sensitive Personal Data may include financial and biometric information, information related to caste, religion, political beliefs, and any other information deemed fit to collect by the Government after consulting with the Authorities and the respective sectoral regulatory bodies.

Lastly, Critical Personal Data is any data notified as such by the Central Government.

3. Data Fiduciaries

Data Fiduciaries are entities responsible for collecting information. They can be the State, a company, a juristic entity, or any other authorised individual that gathers data either by themselves or in collaboration with other such entities.

4. Restrictions on Sharing Personal Data with Others Outside of India

The Personal Data Protection Act allows the processing and storage of personal data outside of India. However, it doesn't allow the same of Sensitive Personal Data. You may still choose to store and process such information outside of the country only if you get permission from the data principal.

Such transfers may be allowed under certain conditions, including:

a. The Authorities approve of such transfers and arrange for the protection of data principal under the Act.

b. The Central Government allows such transfers only after consulting and getting approval from the authorities. Furthermore, the Government can authorize sharing only after protecting sensitive information with the help of applicable laws and verifying that the transfer of such does not affect law enforcement of any kind.

c. The Act does not allow the sharing of critical personal data outside of India. However, the Government may allow such transfers under the pretext of healthcare or emergency services. Under such circumstances, the Government may choose to enable the transfer to under clauses (a) and (b) of sub-section (1) and (2) of the Personal Data Protection Act.

5. Exemptions

The Central Government has the power to exempt an entity from collecting and sharing information under the Act under these circumstances:

a. For the security, public order, sovereignty, and integrity of India.

b. Prevention of incitement to offenses.

c. According to the Act, no person or entity shall use such information for personal, domestic, or journalistic purposes.

How to Keep Data Safe and Secure?

There are many ways to keep personal data safe and secure. Over the years, there has been much research on how to protect data from misuse on a global scale. To secure your personal information, you can follow these steps:

• Back up your data regularly.
• Use strong passwords.
• Be cautious about suspicious emails
• Install and use antivirus and anti-malware applications.
• Don't leave your computer unattended.
• Secure all wi-fi networks.

Final Thoughts

Protecting information that belongs to you is in your hands. While there are laws for preserving an individual's privacy, you should still ensure that you safeguard the information that belongs to you. Use strong passwords for bank accounts. Also, don't forget to secure all wi-fi networks and, more importantly, be sure to use an antivirus application.

Also Read:

1) How to Start a Notebook Manufacturing Company?
2) How to Start a Gold Jewellery Export Business?
3) How to Get an Ayurvedic Medicine Manufacturer License?
4) OkCredit: All you need to know about OkCredit & how it works.

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FAQs

Q. What Does Information Security Involve?

Ans. Information security involves protecting information and systems that store, process, and disseminate information with the help of various IT resources.

Q. What are the Steps to Secure My Computer?

Ans. Follow these steps to secure your computer:

• Install and run an antivirus or anti-malware program.
• Run a backup of the data that resides on your computer.
• Enable the firewall system.
• Encrypt all sensitive information.
• Use a strong password.
• Upgrade your computer's software.
• Physically secure your computer.
• Configure the auto-locking system.

Q. What is Two-Factor Authentication?

Ans. Two-factor authentication is a means to secure your digital accounts using two levels of security, including a username, password, and a temporary security code that you get via email or on your phone.