Customer Data Compliance Made Easy: Best Practices

Most modern organizations collect, process, and store staggering amounts of data compared to the pre-digital era. This data creates tremendous opportunities as it can be analyzed to unlock valuable insights into customer behavior, market trends, and operational efficiencies. However, it also presents one major challenge: maintaining compliance with increasingly complex data protection regulations.?

The Importance of Customer Data Compliance

Customer data compliance refers to the adherence to laws, regulations, and industry standards governing how customer information is handled. Its importance can’t be overstated, as it serves multiple purposes for organizations of all sizes.

First and foremost, customer data compliance helps defend against data breaches, whose global average cost hit a record high of?$4.88 million in 2024. That’s enough to make many organizations close their doors for good.?

Beyond protection, compliance builds trust. When customers and partners know that a business takes data protection seriously, they feel more confident in their interactions. This trust is invaluable in fostering long-term relationships and can be a significant competitive advantage.?

Customer data compliance is also necessary to avoid potentially crippling fines and the subsequent loss of business opportunities that can result from the ignorance or neglect of data protection regulations such as:

• HIPAA (Health Insurance Portability and Accountability Act): This regulation sets the standard for sensitive patient data protection in the healthcare industry. It applies to healthcare providers, health plans, and healthcare clearinghouses, ensuring the confidentiality and security of medical information.
• CMMC (Cybersecurity Maturity Model Certification): Primarily affecting the Defense Industrial Base (DIB),?CMMC (now in version 2.0)?is a unified standard for implementing cybersecurity across the defense contractor supply chain. Its purpose is to guarantee that companies bidding on defense contracts have adequate safeguards in place to protect sensitive information.
• GLBA (Gramm-Leach-Bliley Act): This act impacts the financial sector, requiring financial institutions to explain their information-sharing practices to their customers and to protect sensitive data. It applies to banks, securities firms, insurance companies, and other businesses offering financial products or services.
• PCI DSS (Payment Card Industry Data Security Standard): Applying to all organizations that handle credit card information,?PCI DSS?sets the requirements for secure transaction processing and data storage to prevent credit card fraud and protect customers’ sensitive financial information.
• GDPR (General Data Protection Regulation): While an EU regulation,?GDPR?affects any business that processes the personal data of EU residents, regardless of the company’s location. It’s considered one of the strongest privacy and security laws in the world, with hefty fines for non-compliance.
• CCPA (California Consumer Privacy Act) and CPRA (California Privacy Rights Act): These California-specific laws give consumers more control over the personal information that businesses collect about them. They apply to many companies doing business in California or with California residents.?

Each of these regulations comes with its own set of requirements and potential penalties for non-compliance. As organizations of all sizes increasingly operate across sectors and borders, many find themselves needing to comply with multiple regulations simultaneously.?

The good news is that adhering to best practices for customer data compliance helps across the board, regardless of the specific regulations an organization must follow because the foundation of customer data compliance is remarkably consistent across industries.?

Best Practices for Acing Customer Data Compliance?

We’ve identified five essential practices that form the foundation of a robust data protection strategy, regardless of industry or organization size.

1. Know Your Data Inside and Out

Understanding what data you collect, why you collect it, and how you collect it is the cornerstone of any effective customer data compliance strategy.?

Before gathering any piece of customer information, ask yourself: “Is this essential for our business operations or customer service?” If the answer is no, don’t collect it. This minimalist approach not only simplifies compliance but also reduces the potential impact of a data breach.

When you do collect data, make sure you have explicit consent and a clear, lawful basis for doing so. Document your data collection processes, including the purposes for which data is collected, how it’s stored, and when it will be deleted. Regularly review and update this documentation so that it remains accurate and compliant with current regulations.

2. Implement Strict Access Controls

The principle of least privilege should be your guiding star when it comes to data access. Only grant access to those who absolutely need it, and only for the duration they need it to significantly reduce the risk of both outsider and insider threats.

Data access requests should always be authenticated, ideally using?multi-factor authentication (MFA), which adds an extra layer of security by requiring users to provide two or more verification factors to gain access to a resource.?

Just keep in mind that not all MFA implementations are created equal. SMS-based codes in particular should be avoided when possible due to their vulnerability to SIM swapping attacks.

3. Encrypt Data at Rest and in Transit

Encryption?stops unauthorized individuals from gaining access to your data, and it should be implemented both at rest (when customer data stored on your in-house servers, in the cloud, or employees’ work devices) and in transit (when customer data is being sent over networks).?

This way, even if a malicious actor manages to intercept data or gain access to a storage device, they won’t be able to decipher the information without the encryption key (provided you use a strong, up-to-date encryption algorithm and manage your encryption keys securely).?

4. Train Employees in Customer Data Compliance?

Human error remains one of the leading causes of data breaches. A joint study from Stanford University and security firm Tessian revealed that a staggering?88% of data breach incidents?are caused by employee mistakes.

Regular, comprehensive training is paramount to mitigate this risk. Educate your employees about the importance of data protection, common threats like phishing and social engineering, and the specific compliance requirements relevant to your industry.

Equally important is to create an organizational culture where employees feel comfortable reporting potential issues without fear of punishment. This can be done by setting the right example, rewarding desired behaviors, and implementing a clear, non-retaliatory reporting system.?

5. Don’t Forget About Backup and Recovery Procedures

You must also prepare for the worst, including the loss of your customer data due to a hardware failure or ransomware attack. By implementing a comprehensive backup and recovery strategy, you will be able to quickly recover from any data loss incidents with minimal impact on customers and partners.?

The need for a robust backup strategy holds true even if all your data already resides in the cloud. Contrary to popular belief, data in the cloud, which can on its own be a backup option, is not completely immune to loss, as backup strategies of various cloud providers can vary. What’s more, the provider itself could experience a malware attack or serious technical problem, and you don’t want to have all your eggs in one basket when that happens. That’s why cloud backups and third-party backups should be included in any modern implementation of the?3-2-1 backup strategy, which calls for maintaining at least three copies of your data, storing two backup copies on different storage media, and keeping one backup copy offsite.

Regardless of how many backups you decide to create and where you decide to store them, you should regularly test them to verify your recovery procedures. The last thing you want is to discover that you haven’t been backing up the right customer data once the data is gone.?

Customer Data Compliance Is a Smart Investment?

Customer data compliance is a strategic investment that pays dividends in multiple ways. It helps organizations avoid cybersecurity incidents, shields them from potentially crippling fines and reputational damage, and helps them build trust with their customers and partners.?

However, achieving and maintaining compliance across various regulations can be a complex and resource-intensive task, especially for small and medium-sized businesses. This is where partnering with experienced professionals can make all the difference.

At OSIbeyond, we understand the nuances of customer data compliance across various industries and regulatory frameworks. Our team of experts has a proven track record of helping organizations navigate the complex landscape of data protection regulations, from HIPAA and CMMC to GDPR and beyond.

Contact OSIbeyond today?to learn how we can help your organization ace customer data compliance and turn it into a cornerstone of your business success.