Navigating the New EU-U.S. Data Privacy Framework: A Guide for E-commerce

The recent launch of the EU-U.S. Data Privacy Framework (DPF) is a significant development that you need to understand and incorporate into your business operations. This article will guide you through the key aspects of the DPF and its implications for eCommerce.

Understanding the DPF

The DPF replaces the invalidated EU-U.S. Privacy Shield, offering a streamlined mechanism for transferring personal data from the EU to the U.S. NIST provides a comprehensive guide on the framework, which is designed to help organizations identify and manage privacy risks.

The DPF is rooted in EU data protection law and allows U.S. employers to legitimize the transfer of their HR Data by self-certifying with the Department of Commerce to handle EU personal data in compliance with the DPF Principles. Companies that previously certified to the Privacy Shield and maintained their certification do not have to re-certify but will need to update their compliance with the DPF.

The Benefits of DPF over Standard Contractual Clauses

The DPF offers efficiencies over the EU’s Standard Contractual Clauses (SCCs). The SCCs, especially after their update in June 2021, require companies to provide extensive information about the transfer, describe and implement technical and administrative safeguards for the transferred data, and perform a detailed “transfer impact assessment”. The DPF allows companies to circumvent these taxing and resource-intensive compliance obligations.

Incorporating DPF into Existing Systems

Employers must determine how best to incorporate the DPF into their existing system for cross-border data transfers. For instance, they need to revise their Privacy Shield Privacy Policy to comply with the DPF Principles, refresh their independent dispute resolution mechanism, and enter into any required onward transfer agreements.

DPF and Service Providers

The DPF will facilitate contracting with service providers that handle EU personal data. For instance, U.S.-based multinational employers frequently rely on U.S.-based cloud service providers (CSPs) to centralize and manage HR Data. After the Privacy Shield’s invalidation, these organizations generally had to execute controller-to-processor SCCs between their EU subsidiaries and their U.S.-based CSPs. The DPF allows these employers to transfer HR Data directly from their EU subsidiaries to these vendors without taking any steps other than to confirm that the vendors are listed on the DPF list of certified entities maintained by the Commerce Department on the DPF website.

DPF and the UK and Switzerland

The DPF will shortly facilitate personal data transfers from the United Kingdom and Switzerland. The Commerce Department announced an upcoming “UK Extension” to the EU-U.S. DPF and a Swiss-U.S. Data Privacy Framework. Once these extensions are in place, the DPF will provide a comprehensive mechanism for transfers of HR Data from Europe (broadly defined).

Potential Challenges to the DPF

Despite its benefits, the DPF is likely to be challenged. Max Schrems, the individual responsible for challenging and obtaining the invalidation of the Privacy Shield and its predecessor, the U.S.-EU Safe Harbor Framework, announced his plan to challenge the DPF. While any legal challenges are ongoing, the DPF will remain a viable transfer mechanism. However, until the European Court of Justice is ultimately asked to review the DPF, U.S. multinational employers may be understandably hesitant to rely solely on the DPF.

Conclusion

The DPF offers a less burdensome alternative for legalizing trans-Atlantic data transfers. However, it’s not a “one-size-fits-all” solution. Employers that choose to self-certify to the DPF should determine how best to incorporate the benefits of this mechanism into the company’s existing cross-border data transfer system, while bearing in mind that a legal challenge may eventually appear on the horizon.

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