When it comes to privacy compliance, many small businesses fall into the trap of thinking, “We’re too small to be a target.” But in reality, that assumption couldn’t be further from the truth. Small businesses are increasingly becoming prime targets for serial plaintiffs and aggressive regulatory action, regardless of their size.
Serial plaintiffs, in particular, are not just lurking in the shadows. These individuals and law firms actively seek out businesses—especially small ones—that are not fully compliant with privacy laws. They operate more like detectives, looking for any oversight, mistake, or gap in your compliance practices. Once they find it, they turn it into lucrative class action lawsuits that can devastate small businesses, often without warning.
Why Small Businesses Are at Risk
Serial plaintiffs and federal/state regulatory bodies don’t care how big your company is. From the Federal Trade Commission (FTC) to state-level privacy regulations like the California Consumer Privacy Act (CCPA), privacy laws apply to businesses of all sizes. In fact, smaller businesses with fewer resources or less robust privacy frameworks are often seen as easier targets.
Small businesses may also be less likely to have full-time privacy officers or legal teams, which leaves them more exposed to privacy violations. Whether it’s improper data collection, failure to notify customers of their rights, or neglecting to offer an opt-out option for data sharing, small missteps can result in costly penalties.
The harsh reality is that federal authorities and state regulators are actively enforcing these laws. The financial and reputational damage caused by privacy non-compliance can be severe, and small businesses often find it harder to recover from the fallout.
Serial Plaintiffs: The Silent Threat
Serial plaintiffs are individuals or law firms that specialize in finding and exploiting non-compliant businesses. They scour privacy notices, websites, and business practices to pinpoint where a company may have overlooked privacy laws. These plaintiffs are well-versed in the CCPA, GDPR, and other privacy laws, and they are quick to file class action lawsuits when they identify gaps.
For small businesses, this can be a catastrophic event. What seems like a minor oversight can lead to massive legal fees, settlements, and a tarnished reputation. Many small businesses don’t survive the financial blow from a lawsuit or regulatory penalty.
Privacy Compliance Is Not Just for Big Businesses
The lesson here is simple: Privacy compliance is not optional, even for small businesses. The law doesn’t differentiate based on your revenue or employee count. Whether you’re running a small boutique, an online coaching business, or a growing startup, your company is responsible for adhering to data privacy regulations.
Here’s how small businesses can protect themselves:
- Perform a Privacy Audit: Even if you think your business is too small to need a privacy program, a comprehensive audit can reveal vulnerabilities you didn’t know existed.
- Update Your Privacy Policy: Your privacy notice should be clear, transparent, and fully compliant with the latest laws in your jurisdiction.
- Train Your Team: Make sure your employees understand data privacy best practices and are aware of their role in keeping customer data safe.
- Be Proactive, Not Reactive: Don’t wait until a serial plaintiff or regulatory authority comes knocking. Take steps now to close any gaps in your compliance.
Stay Ahead of Compliance Requirements
As privacy laws continue to evolve and become more stringent, small businesses must stay ahead of the curve. Regulators are increasing enforcement actions, and serial plaintiffs are actively searching for businesses that aren’t fully compliant. The best way to protect your business is by building a robust privacy framework and regularly reviewing your practices. The IAPP has provided some resources for small businesses here.
At HONOS, we specialize in helping small businesses navigate privacy compliance. Whether you need a privacy audit, help updating your policies, or ongoing compliance support, we’re here to ensure that your business stays compliant—and out of the crosshairs of serial plaintiffs and regulators.
Don’t wait for a lawsuit or fine to make privacy a priority. Contact HONOS today and let us help you build a privacy strategy that fits your business and safeguards its future.
