In today’s digital economy, cybersecurity is more than an IT concern—it’s a legal requirement. Businesses of all sizes are responsible for safeguarding sensitive information, including personal, financial, and health data. Ignoring or misunderstanding cybersecurity laws can result in severe legal penalties, financial losses, and long-term reputational damage.
One of the most foundational laws is the Federal Trade Commission Act (FTC Act). Under Section 5, the FTC is empowered to take enforcement action against companies that engage in unfair or deceptive practices, including failures to properly secure consumer data. If your business claims to protect user data but lacks reasonable cybersecurity measures, you could be liable under this law. It’s critical to be truthful about your security policies—and to back those claims with actual protections.
For businesses in the financial services sector, the Gramm-Leach-Bliley Act (GLBA) is key. It mandates that financial institutions implement safeguards to protect customer data and disclose how that information is shared. The Safeguards Rule requires a comprehensive written information security plan, while the Privacy Rule demands transparency with customers about data usage. Even small firms that offer financial products or services may fall under its scope.
In the healthcare sector, compliance with the Health Insurance Portability and Accountability Act (HIPAA) is non-negotiable. HIPAA applies to healthcare providers, health plans, and any business associate handling protected health information (PHI). It sets national standards for data privacy and security, including secure transmission of records, employee training, and breach notification protocols. Failure to comply can result in fines as high as $50,000 per violation.
The Children’s Online Privacy Protection Act (COPPA) is another important federal law, particularly for businesses with online services or products directed at children under the age of 13. COPPA requires verifiable parental consent before collecting personal information and obliges businesses to maintain strict privacy policies and data security protocols.
In addition to federal laws, many state-level privacy and cybersecurity laws impose significant requirements. For example, the California Consumer Privacy Act (CCPA)—now expanded by the California Privacy Rights Act (CPRA)—grants consumers the right to know what personal data is collected, to opt out of its sale, and to request deletion. Meanwhile, New York’s SHIELD Act requires businesses to implement “reasonable” safeguards to protect personal information and expands the definition of a data breach. Businesses across the U.S. may be subject to these laws if they handle data from residents of those states, regardless of where the business is physically located.
If you serve customers in the European Union—or even just collect data via a website accessed by EU citizens—you may also be subject to the General Data Protection Regulation (GDPR). This regulation emphasizes user consent, data minimization, transparency, and the right of individuals to access or delete their personal data. Noncompliance can result in fines of up to 4% of annual global revenue.
Though not a government regulation, the Payment Card Industry Data Security Standard (PCI DSS) is a set of mandatory standards for any business accepting credit card payments. These rules are enforced by the major card brands and require secure systems, encrypted transmission, and limitations on data storage. Noncompliance can result in fines or even the revocation of your ability to process card payments.
To stay compliant with these laws, businesses should start by conducting a cybersecurity risk assessment and developing a written information security policy. Encrypting sensitive data, training employees on cybersecurity awareness, and creating a robust breach response plan are all best practices. Equally important is staying informed—cybersecurity laws evolve, and new regulations are introduced every year.
Ultimately, cybersecurity compliance is about more than avoiding fines. It’s about earning trust. By protecting your customers’ data, you demonstrate responsibility, professionalism, and respect for the people you serve. Whether you’re a solo entrepreneur or a growing company, understanding and adhering to these laws is essential for long-term success in the digital age.
Lorenzo Law, LLC. All rights reserved, 2025.