# GDPR Explained: Key Rules for Data Protection in the EU

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## What Is the General Data Protection Regulation (GDPR)?

The General Data Protection Regulation (GDPR), effective since May 25, 2018, is the most rigorous security and privacy law globally. It was designed to give individuals control over their personal data by dictating the standards for collection and processing of personal information for both residents within and outside the [European Union](https://www.investopedia.com/terms/e/europeanunion.asp) (EU).

Any website attracting European visitors, irrespective of their location, must comply with these guidelines, ensuring the protection of personal data and holding companies accountable for their handling of such information. By replacing the previous Data Protection Directive, GDPR not only strengthens consumer privacy rights but also standardizes data protection across all EU member countries.  

### Key Takeaways

*   The General Data Protection Regulation (GDPR) is a comprehensive legal framework implemented in 2018 to protect personal data of individuals in the EU and beyond, influencing global data privacy practices.
*   GDPR demands transparency and accountability from companies, requiring them to clearly inform users about data collection practices and empower them with rights such as data access and erasure.
*   The regulation enforces strict rules on the processing and handling of personal data, mandating anonymization or pseudonymization to protect user identity.
*   Companies must appoint Data Protection Officers (DPOs) and ensure compliance, which can be challenging due to potential administrative burdens and increased business costs.
*   The GDPR's reach extends to firms and individuals outside the EU, affecting global websites that attract European visitors and necessitating adherence to its guidelines regardless of local laws.

## In-Depth Overview of the GDPR's Key Provisions

The General Data Protection Regulation (GDPR) is a law that was approved by the European Union in April 2016 and went into effect on May 25, 2018.

It replaced the Data Protection Directive to regulate how [companies](https://www.investopedia.com/terms/c/company.asp) handle consumer data online, including rules on moving information through automated means.

The law prevents companies from using confusing or vague language on their websites. It also ensures:

*   Website visitors are notified of the data collected.
*   Visitors explicitly consent to that information-gathering by clicking on a button or some other action.
*   Sites notify visitors in a timely way if any of their personal data held by the site is ever breached.
*   There is a mandated assessment of the site's data security.
*   Whether a dedicated [data protection officer](https://www.investopedia.com/terms/d/data-protection-officer-dpo.asp) (DPO) needs to be hired or an existing staffer can carry out this function.

These requirements can be stricter than local laws where the site is based.

Information on contacting the DPO and staff must be available to let visitors exercise their EU data rights, including deleting their site presence. The site must also add staff and other resources to be capable of carrying out such requests.

> **Fast Fact**
>
> The requirement of an "Agree" button largely explains the ubiquitous presence of disclosures that sites collect cookies, which are small files that hold personal information such as site settings and preferences.

## Noteworthy GDPR Considerations for Businesses

As further protection for consumers, the GDPR also calls for any [personally identifiable information](https://www.investopedia.com/terms/p/personally-identifiable-information-pii.asp) (PII) that sites collect to be either anonymized (rendered anonymous) or pseudonymized with the consumer's identity replaced with a pseudonym.

 This helps firms conduct broader data analysis, like assessing customers' average debt ratios in a region, beyond their original data purposes.

The regulation applies to all 27 members of the EU and the [European Economic Area](https://www.investopedia.com/terms/e/european-economic-area-eea-agreement.asp) (EEA), regardless of where websites and residents are based. As such, it must be heeded by all sites that attract European visitors, even if they don't specifically market goods or services to EU residents.

The regulation covers EU citizen data, even if stored in the U.S. Likewise, U.S. citizens living in the EU are covered on sites in the union.  

> **Important**
>
> The GDPR affects data beyond that collected from customers. Most notably, perhaps, the regulation applies to the human resources records of employees.

## Challenges and Criticisms Surrounding GDPR Implementation

The GDPR has attracted criticism in some quarters. Some say that the requirement to appoint DPOs, or simply to assess the need for them imposes an undue administrative burden on certain companies. Some complain that the guidelines are too vague on how best to deal with employee data.

In addition, data cannot be transferred to another country outside the EU, unless the receiving company guarantees the same degree of protection as the EU requires. This has led to complaints about costly disruption to [business practices](https://www.investopedia.com/terms/o/operations-management.asp).

There's a further concern that the costs associated with GDPR will increase over time, in part because of the escalating need to educate customers and employees alike about data protection threats and solutions.

There is skepticism about whether EU and global data protection agencies can consistently enforce and interpret the regulations.

## How Do Companies Become Compliant Under the General Data Protection Regulation?

There are several ways for companies to become GDPR-compliant. Some of the key steps include auditing personal data and keeping a record of all the data they collect and process. Companies should also be sure to update privacy notices to all website visitors and fix any errors they find in their databases.

## Who Is Covered Under the General Data Protection Regulation?

In theory, any individual who visits sites that are based in the European Union is protected. This includes anyone within the union itself and beyond its borders. The regulation also applies to a citizen of the EU whose data exists outside the union. And if you're a citizen of another country who lives in the EU, your data is also protected under the law.

## When Did the GDPR Come Into Effect?

The GDPR was approved in April 2016. However, it took two years for the framework to be established. As such, the regulation went into full effect on May 25, 2018.

## The Bottom Line

Businesses collect personal data and they have often sold that information—sometimes without the consent of their consumers. But laws have been put into place in parts of the world to help protect individuals.

Rules under the General Data Protection Regulation went into effect in the European Union in 2018. Under the law, companies must protect consumer data and inform them how their information is used. It has a broad reach, extending beyond the [borders of the EU](https://www.investopedia.com/terms/e/emu.asp).

> **Article Sources**
>
> 1.  European Council. "[The General Data Protection Regulation](https://www.consilium.europa.eu/en/policies/data-protection/data-protection-regulation/)."
>     
> 2.  GDPR.eu. "[Article 88 - Processing in the Context of Employment](https://gdpr.eu/article-88-processing-of-employees-personal-data/)."
>     
> 3.  GDPR.eu. "[Recital 32 - Conditions For Consent](https://gdpr.eu/Recital-32-Conditions-for-consent)."
>     
> 4.  GDPR.eu. "[Article 34 - Communication of a Personal Data Breach to the Data Subject](https://gdpr.eu/article-34-communication-of-a-personal-data-breach/)."
>     
> 5.  GDPR.eu. "[Article 37 - Designation of the Data Protection Officer](https://gdpr.eu/article-37-designation-of-the-data-protection-officer/)."
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> 6.  GDPR.eu. "[Article 38 - Position of the Data Protection Officer](https://gdpr.eu/article-38-data-protection-officer/)."
>     
> 7.  GDPR.eu. "[Article 6 - Lawfulness of Processing](https://gdpr.eu/article-6-how-to-process-personal-data-legally/)."