NSBA has consistently called for a unified federal approach, rather than the development of a patchwork 50-state system we are now seeing develop.
Data privacy has been a huge issue looming before small-business owners with almost nothing in terms of clear, concise national guidelines or directives. A number of states are now developing their own rules governing internet privacy, even though digital information flow doesn’t stop at state lines.
Most recently, legislation is pending in Florida that could ban certain kind of targeted advertising and would be particularly problematic for the smallest of businesses that can’t afford costly and cumbersome software and/or PR firms to manage—and more carefully target—potential customers.
Following the sweeping changed enacted by the EU’s General Data Protection Regulation (GDPR) and followed up by several states enacting their own data privacy rules, U.S. businesses are faced with a patchwork of differing standards and rules in an increasingly mobile business environment. Navigating these various rules is complicated for any business.
Unlike large businesses with staffs of legal and IT experts, however, small businesses are far less able to shift costs and resources around and face higher risks of running afoul of these rules. Even worse: these rules can stymie existing business-customer relationships and prevent new customer growth.
A recent study by Engine, a nonprofit focusing on the convergence of start-ups and hi-tech, estimated that the per-state costs of complying with each law amounts to $15,000-$60,000. The report goes on to state that startups invest anywhere between $100,000-$300,000 in data privacy infrastructure—and the more state laws that get passed, the higher those costs will climb.
According to Engine, 90% of startups said online advertising provided their business with an affordable option to launch and/or grow their business, and 86% felt online advertising is important to business survival and growth. Ill-advised attempts to regulate the flow of information on the internet could have tremendous unintended consequences for the ability of small businesses to reach customers and grow their businesses.
Small businesses need clear guidelines that fit the U.S. legal system, one that targets abuses, encourages innovation, and permits reasonable flexibility. This is why NSBA has consistently called for a unified federal approach, rather than the development of a patchwork 50-state system we are now seeing develop.