Understanding GDPR Fines and How to Avoid Them

Since 28 January 2022, data protection authorities have imposed €1.64 billion in GDPR fines across Europe. Such penalties are like roadblocks in any organization’s growth path, as they can significantly impact the company’s revenue and reputation.

So, if you’re required to comply with the General Data Protection Regulation, it is essential to understand what exactly GDPR fines are and how you can avoid these costly penalties. In this comprehensive guide, we will discuss everything you need to know about GDPR fines.

What are GDPR Fines?

Article 83(4) of the GDPR imposes fines of up to 10 million euros, or 2% of a company’s global annual turnover from the previous year, whichever is higher. The term “undertaking” aligns with Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU), as defined by the European Court of Justice. This term covers any entity involved in economic activities, regardless of its legal status or funding. It includes violations like:

• Failure to implement controls and organizational measures 
• Failure to comply with data breach obligations
• Not appointing a Data Protection Officer

Severe violations fall under Article 83(5) which can include:

• Violations of the basic principles, including conditions for consent
• Infringement of data subjects’ rights
• Non-compliance with international regulations concerning data transfer

So, if you fail to secure the privacy and personal data of EU citizens as per the GDPR guidelines, you might attract hefty GDPR fines. Let’s now have a look at the two tiers of GDPR fines.

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What Are the Types of GDPR Fines?

In general, there are two types of GDPR fines that are imposed as penalties for GDPR Non-Compliance:

1. Administrative Fines

These are the most common GDPR fines imposed by data protection authorities (DPAs) in case of non-compliance with the GDPR. Companies can issue administrative fines for violations such as failure to appoint a data protection officer, failure to obtain valid consent, failure to conduct a data protection impact assessment, etc.

2. Criminal Fines

In certain cases, companies may face criminal charges and fines for severe GDPR violations. If the organization is recklessly or intentionally processing and handling personal data, it is a direct violation of GDPR rules. The fines are, however, determined based on the duration of the infringement and the level of cooperation of the company.

The DPAs will determine the type of charges and fines by weighing different factors and the nature of the violation. Let’s now have a look at the common violations under GDPR.

What is Considered a Violation Under GDPR?

Under GDPR, any act or failure to act by a company that infracts the GDPR requirements is considered a violation. Here are some violations:

• Ineffective/Improper Security Measures: If the company fails to implement adequate technical and organizational security measures to protect privacy and data.
  
  
• Failure to obtain valid consent: If the company fails to obtain informed and valid consent from customers before collecting and processing their data.
  
  
• Failure to report breaches: If the company fails to notify the Supervisory Authorities and the affected individuals of any data breaches within 72 hours of getting aware.
  
  
• Negligence to appoint a data protection officer (DPO): If the company is required to appoint a DPO, who will be responsible for regulation compliance and fails to do so.
  
  
• Failure to follow the basic data protection principles: If the company fails to comply with the fundamental GDPR principles, such as data transparency, accountability, and minimization.
  
  
• Transfer of personal data outside the EU region without proper safeguards: If the company transfers personal data, to countries outside the EU without implementing proper security measures

So, what will be the GDPR non-compliance penalty? Let’s check it out below.

How Much Are You Required to Pay if Penalized Under GDPR?

In general, the fines are divided into two tiers based on the severity of the GDPR violations.

Level-one Fines (Article 83(4)) – up to €10 million or 2% of the company’s worldwide annual revenue, whichever is higher: This tier applies to less severe violations like failing to provide an inventory of processing activities, failing to appoint a data protection officer (DPO), not cooperating with the Supervisory Authority, not maintaining proper data records, not communicating about personal data breaches, and so on.

Level-two Fines (Article 83(5)) – up to €20 million or 4% of the company’s worldwide annual revenue, whichever is higher: This tier applies to more severe violations like not following the basic principles of data processing, failure to obtain consent from customers, failure to respect data subject rights, transferring personal data without safety measures, not responding to data breaches, and so on.

So, level-one fines are imposed when there is negligence on a less severe level, and level-two fines are imposed when an organization fails to demonstrate GDPR compliance with the basic principles of the right to privacy. However, the specific tier of the fine will depend on multiple factors, including the extent and nature of the violation.

Do GDPR Fines Differ Country-wise?

The GDPR applies uniformly across the European Union. However, there can be some differences in the GDPR fines based on how the regulation is enforced, and violations are imposed in different EU member states.

All EU member states have their own supervisory authority for effectively enforcing the regulation within their jurisdictions. The framework and rulebook for privacy and data protection across the EU are the same. But, there can be some variations in how each supervisory authority interprets and imposes the regulation.

The enforcement of GDPR in different countries can vary, which might result in differences in the number of fines imposed. Let us now have a look at how you can avoid these fines!

How to Avoid GDPR Penalties?

A data breach can hit any organization at any time. But, it is crucial that you have adequate safety measures in place to stop breaches. Here’s what you should be practicing to avoid GDPR fines.

1. Focus on Data Mapping

Data mapping is one of the best practices for keeping all personal data organized. You need to document your customers’ personal information in a single place. This way, you will have access to this data at a centralized location. So you can easily see how much data you have, the usage, and so on.

This is not only a good practice for GDPR but also in general, as you get a 360-degree view of the data, which allows you to use the data more accurately.

2. Always Obtain Express Consent

For data processing under GDPR, consent is one of the most crucial things to obtain from the users. Express consent means that you are showing a popup box to the user where they read and can click a checkbox to give permission regarding the usage of their personal information.

If you have consent for the data you gather and process from the start, you are less likely to run into any trouble with GDPR compliance. Also, consent is important to keep things transparent and eventually increases trust plus credibility for your business.

3. Keep Your GDPR-compliant Privacy Policy Up To Date

Through your GDPR-compliant privacy policy, you need to provide users with easily digestible and accessible information about your data processing ventures. The policy should be up to date as per the GDPR requirements.

The things that generally come under the privacy policy are the contact information of data collectors, the legal basis of data collection, the reasoning behind the collection of personal data, the types of data you are collecting, to where the data is transferred, for how much time it is stored, and so on.

4. Minimize the Personal Data You Collect

The best practice while collecting data is to only ask for personal information that is really necessary. If you don’t need someone’s office address or personal identification number to process an order, remove those fields from your website.

This is a straightforward approach as the minimal amount of data you will have to store and process, the less you will have to worry about potential data breaches. How so? Because the exposure of someone’s name and mobile number will have less severe consequences than the exposure of financial details.

5. Report Data Breaches on Time

According to Article 33 under GDPR, you need to report a data breach within 72 hours of you being aware of the breach. You should inform the supervisory authorities, partners, and the impacted customers about the breach.

While reporting a breach, it is often the best practice to mention the possible reasons behind the breach, how you are mitigating it, and what security measures you will be taking to avoid such breaches in the future.

6. Make Cybersecurity Your Priority

As per Article 5(f) under GDPR, it is your responsibility to have proper security measures in place to protect personal data. If there is a data breach, you could bear GDPR fines if you didn’t have proper cybersecurity in place to deal with the threats.

Depending on the amount of data you are processing, and the sensitive nature of the personal data, you need to have adequate security to protect your data. Apart from the basics, such as installing antivirus software, using strong passwords, encrypting your data, etc., you need a dedicated team or a cybersecurity service provider to maintain your security.

Closing Thoughts

One thing is quite clear: non-compliance can result in hefty GDPR fines! Therefore, it is your responsibility to act before such penalties come knocking on your door for GDPR violations.

The six steps that we discussed above will be helpful in being GDPR-compliant and avoiding penalties. If you have any doubts regarding the same, feel free to reach out to our GDPR wizards for more information.

FAQs

1. What is the highest fine for GDPR?

The highest fine for GDPR is up to €20 million or up to 4% of the annual global turnover of the preceding financial year, whichever is higher.

2. Is GDPR compliance mandatory?

Yes, GDPR compliance is necessary for any entity that collects or processes the personal data of EU residents. Hence, any organization that deals with such personal data must comply with the regulations set forth by the GDPR.

3. Can I delay reporting in case of a data breach until I have the full facts?

No, you can’t delay more than 72 hours. Data controllers must notify the supervisory authority about the personal data breach within 72 hours of becoming aware unless the breach is unlikely to result in damage or risk to the users’ rights.

4. Is data breach a criminal offense as per GDPR?

Data breach is a criminal offense only if you knowingly or recklessly disclose or obtain personal data without the data controller’s consent.

5. What is an example of a GDPR data breach?

Examples of GDPR data breaches include unauthorized users gaining access to customers’ personal data, loss or theft of computers, data servers, etc.