Stay GDPR-compliant without breaking a sweat using contract management tools
Getting rid of processes prone to human errors are important for GDPR compliance.
Data privacy has become a non-negotiable priority for businesses everywhere, especially for those managing contracts that involve sensitive customer information.
For companies in the U.S. that handle the personal data of EU citizens, the stakes are even higher. Failing to meet the GDPR requirements can lead to huge fines, damaged reputations, and a loss of trust.
Let’s explore the biggest challenges, real-world consequences, and the steps you can take to protect your business.
The challenges U.S. companies face with GDPR compliance
While GDPR was introduced in the European Union, it applies to any company that processes the personal data of EU citizens. For U.S.-based businesses, this adds a layer of complexity on top of existing domestic privacy regulations.
Here are some common pitfalls:
- Businesses often store and share contracts via email or unsecure systems, exposing sensitive data to potential breaches
- Fragmented systems make it hard to track, update, or delete personal data when required
- Companies working with third-party vendors may not fully understand the compliance risks if those partners mishandle data
In 2021, Amazon faced a staggering €746 million fine for GDPR violations linked to its advertising practices. This case highlighted how easily businesses can fall afoul of GDPR, even when operating outside the EU.
Read also: How contract management can help you automate your sales process?
The real-world costs of non-compliance
When businesses fail to protect personal data, the consequences can be catastrophic.
- Equifax data breach
In 2018, Equifax agreed to pay at least $575 million after a breach exposed sensitive information of 147 million people. The case emphasised the importance of secure data storage and proactive security measures. - Meta fined €1.2 billion
In 2023, Meta was penalised for transferring user data to the U.S. without adequate safeguards. The fine underscored the need for businesses to align with GDPR requirements when processing EU citizen data.
These examples serve as a wake-up call for companies of all sizes. Data privacy isn’t just a regulatory box to check. It’s a critical part of building customer trust and avoiding financial disasters.
How manual contract management can jeopardize GDPR compliance
The General Data Protection Regulation (GDPR) governs all activities involving personally identifiable information, including those related to contracts. Companies must carefully assess how they process documents containing personal data. Processing activities include actions like saving, sending, filing, or even deleting these documents.
Unfortunately, manual contract management practices introduce vulnerabilities that can lead to GDPR non-compliance. Here’s why.
Processing activities may include any action that you do on that document, such as saving, sending, filing, etc.
Some of the activities that are prone to human errors include emailing contracts attached in emails back and forth, creating and managing contracts in “manual” formats such as Word/PDF/paper, or saving a different contract version every time there is a change to the contract on your local computer.
The risks of manual contract processes
Manual contract management often involves activities prone to human error and lack of oversight. Common examples include:
- Emailing contracts back and forth
Contracts are frequently sent as attachments in emails, which increases the risk of accidentally sending sensitive data to the wrong recipient. - Using outdated formats like Word, PDF, or paper
These formats make it difficult to track changes and ensure all parties are working on the most up-to-date version of a contract. - Saving multiple versions on local drives
When contracts are stored in personal mailboxes or local computers, outdated versions often linger, creating security gaps and violating data retention policies.
For instance, an employee could inadvertently email a contract to an incorrect recipient or fail to delete expired contracts containing personal data from their local device. These oversights can quickly escalate into GDPR compliance violations.
Why this matters for GDPR compliance
As a data controller, your organisation has a legal obligation to maintain control over the flow of personal data. This means you are responsible for ensuring that all data processing activities are secure and free from unnecessary risks.
Here’s why manual contract management is problematic:
- Lack of data flow visibility: Without proper tracking, it becomes easy to lose sight of where personal data is stored or sent.
- Higher risk of breaches: Human errors like misaddressed emails or forgotten versions leave sensitive data vulnerable.
- Non-compliance with data retention policies: Failing to remove outdated contracts violates GDPR’s principle of data minimisation.
One of the most significant compliance risks under GDPR is the failure to map and control data flows. Manual processes make it difficult to demonstrate accountability, which is a core requirement of the regulation.
The solution to mitigate risks
Besides overseeing the internal routines and procedures, companies need to provide an alternative way that is not only secure but also easy to adopt. Employees will still need to accomplish their tasks, however, in a GDPR compliant way. The recommended approach to achieve this is for companies to look for a cloud-based solution that fulfills these criteria:
- The solution is secure and uses approved encryption standard
- The solution stores your data within the EU or EEA
- The solution eliminates the “attach to email” practice
- The solution eliminates the “save to disk” practice
- The solution allows you to manage documents within the service itself
Switching to an automated and centralised contract management platform can eliminate these risks. Here’s how:
- Real-time tracking: Keep all contract data in one secure location with version control to ensure everyone works on the same document.
- Access control: Restrict who can view, edit, or share contracts to reduce the risk of accidental exposure.
- Data retention policies: Automate reminders and deletion processes for expired contracts to comply with GDPR’s retention rules.
Taking these steps not only strengthens your GDPR compliance but also streamlines your workflow, saving your organisation time and resources.
How to ensure your business stays compliant
Avoiding GDPR pitfalls starts with intentional action. Here are some steps your company can take to ensure compliance:
- Strengthen your data protection practices
Encrypt sensitive information and use secure platforms for contract management - Conduct regular privacy audits
Regularly review your processes to identify weak spots in how you store, process, and share data - Train your team on privacy best practices
Employees need to understand how their actions can impact GDPR compliance. Provide clear guidance and ongoing training - Evaluate your third-party partnerships
Make sure your vendors and service providers follow GDPR standards, as their mistakes can land you in hot water
By addressing these areas, you can minimise risks while demonstrating a clear commitment to data privacy.
Key takeaways
Many PDF-based e-signing tools out there require you download and upload the contract each time you make an update during the negotiation process. You often have to open the original Word document, make requested changes, save the document as PDF, upload to the electronic signing service.
By doing this, you may be unintentionally saving the older versions of the contract on your computer. You may even have to attach the document to your email. These practices, as mentioned earlier, present serious GDPR compliance risks.
So the key takeaway is, if you are still relying on paper or PDF-based e-signing tools, you are not ready for GDPR.
- U.S. companies handling EU data must take GDPR compliance seriously
- High-profile cases, like those involving Amazon and Meta, show the financial and reputational risks of non-compliance
- Proactive measures such as data encryption, employee training, and vendor evaluations can safeguard your business
Taking these steps now can save you from costly mistakes later. Protecting your customers’ data isn’t just about avoiding fines. It’s about building trust and staying ahead in a competitive market.
Read also: Oneflow’s commitment to the GDPR compliance.