The early days of ecommerce felt like the Wild West. Consumers had no idea the amount of data that brands held on them, which made sophisticated marketing strategies like personalization much easier.
Fast forward to today, and Gartner estimates that three-quarters of the global population have their personal data protected under privacy laws. Compliance with these regulations is mandatory, and falling short can result in hefty fines and legal challenges.
Ecommerce brands have gone through the wringer to try and keep up, maintaining consumer privacy now by default. That, coupled with cookie-tracking limitations imposed by browsers, means it’s harder than ever to not only collect and use data ethically, but also tailor shopping experience to the customers who demand them.
This article will be updated as consistently as data regulations have and will likely continue to in the future. In the meantime, here are a few current tips and best practices that technology leaders rely on to remain compliant.
What is data compliance?
Data compliance is an organization’s approach to adhering to legal and regulatory requirements. It can also cover compliance with any applicable industry standards such as personal data collection, storage, processing, and sharing.
Data security compliance is a similar term that refers to a set of standards and laws that organizations must follow to secure their data. It involves encrypting sensitive data (such as customer addresses and payment details), providing user access controls, and implementing reliable backup systems.
Why data compliance matters in ecommerce
Compliance with data security laws is usually mandatory, and failure to comply can result in severe penalties that can change the trajectory of an organization. Regulatory bodies hand out costly fines in the event of a breach, alongside any legal repercussions you incur for taking improper care of the data you hold.
There’s also the risk of reputational damage when you aren’t compliant with data protection regulations. Per Deloitte, nearly 6 in 10 consumers worry that their devices are vulnerable to data security breaches. Another 86% of working-age people are already concerned about the amount of data companies hold on them. Word of a data breach can make them even less willing to share their data, which makes personalization efforts suffer.
Compliance, on the other hand, signals to customers that their data is being handled responsibility. This can build trust and loyalty, while also encouraging customers to hand over more data that you can use to personalize the shopping experience.
Key data compliance regulations
Ecommerce businesses are required to remain compliant with regulations that protect customer data. One example of this is thePayment Card Industry Data Security Standard (PCI DSS), which is a global information security standard for organizations that handle branded credit cards. Opt for a PCI DSS-compliant payment processor that tokenizes and encrypts cardholder data to prevent it from falling into the wrong hands.
Any external software, such as marketing analytics tools or third-party payment processors, must also have their own data compliance security measures in place. Your business is responsible for the personal data you collect from your customers, including the data you give to your vendors to process on your behalf.
Industry-specific considerations
Different industries have unique data compliance requirements. Understanding these regulations and standards is crucial to ensure that you remain compliant, even if you already meet the broader global standards. One example of this is the Gramm-Leach-Bliley Act (GLBA), which applies to financial institutions in the United States. Banks, investment companies, and insurance firms in the US must implement rigorous safeguards to protect customers’ data, and also clearly explain their data-sharing practices to all customers.
Any financial data you’ve collected on customers is also subject to compliance rules. Ransomware is the biggest threat for 92% of industries, with a Bluefin study finding that ransomware and extortion techniques—such as malware, phishing, and distributed denial-of-service (DDoS) attacks—account for almost two-third of all data breaches.
Some data compliance regulations are global, meaning that they’re the general standard for organizations across the world. Others are regional—not just in the sense that they apply where your business is based, but to the users that reside there. Popular examples include:
- The General Data Protection Regulation (GDPR) is a major law in the European Union (EU) that governs data protection and privacy. It applies to any company handling data of EU residents, even if the business itself is located outside the EU.
- The California Consumer Privacy Act (CCPA) enhances privacy rights for residents of 13 US states, with another six states set to join them over the next couple of years. It gives users the right to opt out of data collection, and to request to know exactly what data you hold on them.
- ThePersonal Information Protection and Electronic Documents Act (PIPEDA) requires all businesses to get consent before collecting personal data from Canadian users.
In recent years, Colorado, Connecticut, Virginia, and Utah have all implemented similar consumer privacy and data protection acts. Other states are also catching up with active bills. New Jersey’s Senate Bill 332 passed in 2024 and went into effect in January of 2025.
Best practices for implementing data compliance
A data compliance framework can help organizations establish a structured approach to data compliance. Here’s what that looks like in practice.
Identify relevant regulations
The exact compliance requirements for your organization depend on who you’re collecting data from and the type of information you’re storing. For example, an online retailer that sells medical equipment might collect doctors’ notes from their customers, so they’d be required to be HIPAA compliant.
It’s worth enlisting the help of a data compliance specialist at this stage. They can inform you of any data regulations that apply to your business, saving you money in the long run from cases of noncompliance.
Build a data inventory
If you were asked to share the data that you had on a customer when they requested it, would the information be easy to find? A data inventory—a central repository of the data you hold, process, and share—compiles this information in a single system. It should allow you to easily share the type of data in use, how you use it, where it’s stored, and the details of people who have access to it.
A data inventory also helps you remain compliant with data protection laws. For example, GDPR regulations mandate that you only collect and store data for legitimate purposes. The data inventory gives you a full-picture view of exactly what you’re collecting so you can remove unnecessary or redundant data collection practices.
Plus, knowing what data you hold (and where) helps with auditing and data-breach responses. You can see exactly what data leaked from where, and whether any other data is at risk of being compromised.
Develop a data protection policy
Shipping, returns, exchanges—there are a vast number of policies that keep an ecommerce business running smoothly. Although data protection isn’t the most glamorous of topics, a customer-facing data protection policy should educate people on how your business collects, manages, and protects personal data.
Core elements of a data protection policy include:
- Who it applies to (e.g., customers or website visitors)
- Types of data you collect, such as behavioral data (e.g., browsing history through browser cookies) or sensitive data (e.g., payment details)
- How this data is collected
- How long you’ll store the data (known as the data lifecycle)
- How the data is shared—for example, sharing order details with third-party logistics (3PL) partners
- Data protection principles that you follow, like only collecting data for specific purposes and promising not to sell data to third parties
- Data security measures you have in place to protect personal data
- How customers can opt out, request deletion, and request access to their data
- How you’ll handle data or security breaches
Again, it’s worth asking a legal professional for their input at this stage. Regulatory firms might refer back to your policy, and noncompliance can cause major financial strain on your business. A legal expert knows the ins and outs of these regulations to help you start off on the right foot.
Conduct regular risk assessments and audits
Data compliance isn’t a one-time task. Security holes can appear in your software; employees can leave your organization with their login credentials still intact. And scammers are always coming up with sophisticated new ways to steal data from businesses, and data protection laws are constantly evolving to adapt to these threats.
Ongoing monitoring helps identify vulnerabilities and ensure compliance. It also helps you demonstrate ongoing compliance with all requirements—you’re always prepared for an external audit in case there’s a question surrounding your data protection measures.
Risk assessments are always important, but more so as your business grows. Perhaps you’re onboarding a new 3PL partner or expanding into a new region. The way data is stored, processed, and disposed of can change with this type of expansion, and regular risk assessments (alongside updates to your data inventory) can help you spot any gaps in compliance.
Provide ongoing training and awareness programs
Help employees understand the importance of data compliance with regular training and development opportunities. This also helps maintain your data protection policy since employees likely have access to customers’ personal data. They need to know how to use, store, and access it responsibly.
Combine this with promoting best practices in data security, like:
- Using strong passwords that are never reused and are stored in a password manager
- Enabling multifactor authentication on user accounts
- Detecting and report security threats
- Prioritizing access control and sharing data on a need-to-know basis
- Using secure WiFi networks when handling sensitive data
- Regularly updating software
Leverage technology and frameworks
Data protection is no small job—it’s one that increases as your business scales and customer base grows. Automated compliance tools can help streamline data compliance efforts and ensure compliance with changing regulations.
Common controls frameworks (CCF), for example, guide you through existing compliance assessments. Tools like Adobe CCF and TrustCloud can identify potential risks and offer guidance into how to implement required controls, while compliance software helps manage renewals.
There’s also the option to use privacy, security, and data governance platforms like OneTrust or TrustArc. Both are designed to manage your data collection policies and offer features like data subject request management, cookie-consent management, and vendor-risk assessments.
Data breach prevention and response
Data breaches can happen through no fault of your own and often in spite of your best efforts to prevent them, which makes it critical to always have a plan for dealing with one. Hackers might send deceptive emails that encourage employees to share login credentials for platforms that store customer data. Outdated or weak encryption algorithms used by third-party vendors can also create opportunities for hackers to intercept your data in transit, therefore causing a breach.
A well-defined data-breach response plan can help minimize the impact of a breach, should the worst happen. This plan should detail:
- Key personnel involved in handling a breach, such as IT, compliance, or legal teams
- Guidance on how to notify the customers involved in the breach, which should include clear instructions on how to protect themselves (e.g., changing their passwords if a database of login credentials has been compromised)
- How you’ll contact the relevant authorities or regulatory bodies
- How you’ll conduct internal investigation into how the breach occurred, working with forensic experts if required
- Your post-incident review policy, which details the steps you’ll take to patch the security flaw and prevent similar breaches in the future
It also helps to have a disaster recovery plan that can quickly restore your systems and data in case of a breach. It helps you maintain infrastructure, including applications and customer data, to minimize downtime and further disruption.
Shopify keeps leading brands at the forefront of security
Data compliance is a critical aspect of business operations that requires ongoing attention and effort. This adds up to a lot of tedious work that most developers don’t want to do. Data compliance is a constantly-moving target thanks to evolving frameworks like PCI for secure payments and SSL encryption.
Unlike other commerce platforms, on which brands are solely responsible for building secure solutions and ensuring compliance, Shopify proactively makes changes to our infrastructure to keep brands at the cutting edge of security. Shopify provides PCI compliance for all built-in features, for example, while also providing a secure environment through SOC 1, 2, and 3 compliance. For more information about our PCI and SOC reports, click here.
Want to learn more about how Shopify takes the burden of data compliance and security off of brands—and how it frees them up to innovate in an increasingly competitive commerce landscape? Get in touch.
FAQ on data compliance regulations
What is the role of data compliance?
Data compliance is a business function that helps organizations follow laws and regulations that protect sensitive data. It’s designed to maintain consumer privacy and prevent data breaches that cause financial loss and reputational damage.
How do you ensure data compliance?
To ensure data compliance, keep a data inventory that details the types of data you collect and why. This gives you a big-picture view of how you collect and store data, which acts as a checklist that you can work through to ensure compliance.
What is the difference between data security and compliance?
Data security focuses on practical steps that a business takes to protect data, while compliance means you’re adhering to regulatory requirements (such as GDPR).
Why is compliance not security?
Compliance is not security because the former means you’re adhering to regulatory requirements. Security is a proactive extra measure that you take to ensure that personal data is protected at all times.
What is the difference between data governance and data compliance?
Data governance is an internal procedure that organizations follow when managing data. Compliance, on the other hand, refers to the practice of following regulatory requirements and data protection laws.
