Privacy Shield

Definition & Meaning:

Privacy Shield refers to a framework designed to facilitate the transfer of personal data from the European Union (EU) and Switzerland to the United States in compliance with data protection standards.

It replaced the International Safe Harbor Privacy Principles, which were invalidated in 2015.

Privacy Shield aims to ensure that the entities in the US handling personal data from the EU and Switzerland adhere to a set of privacy principles that align with the EU’s data protection requirements.

For a US-based company to participate in the Privacy Shield, it must self-certify annually to the Department of Commerce that it meets the necessary privacy standards.

This self-certification involves adhering to principles like notice, choice, accountability for onward transfer, security, data integrity and purpose limitation, access and recourse, enforcement, and liability.

For example, if you run a SaaS business and you collect personal data from users in the EU, participating in Privacy Shield can make it easier for you to transfer that data to your servers in the US legally.

It’s a way of showing your European users that you take their privacy seriously and that you’re committed to protecting their data in accordance with European standards.

However, it’s important to note that in July 2020, the Court of Justice of the European Union invalidated the Privacy Shield framework, ruling that it did not offer adequate protection for EU citizens’ data when transferred to the US.

Following this decision, businesses that previously relied on Privacy Shield had to look for alternative mechanisms, such as Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs), to ensure compliance with EU data protection laws when transferring personal data outside the EU.

Despite the invalidation, the principles and commitments of Privacy Shield can still serve as a valuable guide for US companies aiming to align with European data protection standards.

Businesses looking to operate in compliance with EU data protection laws must stay informed about the latest legal developments and seek alternative solutions to Privacy Shield for international data transfers.