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Natsios Young Architects

5 July 2010

Safe Harbor Overview

The European Commission’s Directive on Data Protection went into effect in October 1998, and would prohibit the transfer of personal data to non-European Union nations that do not meet the European "adequacy" standard for privacy protection. While the United States and the European Union share the goal of enhancing privacy protection for their citizens, the United States takes a different approach to privacy from that taken by the European Union. The United States uses a sectoral approach that relies on a mix of legislation, regulation, and self-regulation. The European Union, however, relies on comprehensive legislation that, for example, requires creation of government data protection agencies, registration of databases with those agencies, and in some instances prior approval before personal data processing may begin. As a result of these different privacy approaches, the Directive could have significantly hampered the ability of U.S. companies to engage in many trans-Atlantic transactions.

In order to bridge these different privacy approaches and provide a streamlined means for U.S. organizations to comply with the Directive, the U.S. Department of Commerce in consultation with the European Commission developed a "safe harbor" framework. The safe harbor -- approved by the EU in 2000 -- is an important way for U.S. companies to avoid experiencing interruptions in their business dealings with the EU or facing prosecution by European authorities under European privacy laws. Certifying to the safe harbor will assure that EU organizations know that your company provides "adequate" privacy protection, as defined by the Directive.


The safe harbor provides a number of important benefits to U.S. and EU firms. Benefits for U.S. organizations participating in the safe harbor will include:

  • All 27 Member States of the European Union will be bound by the European Commission’s finding of adequacy
  • Companies participating in the safe harbor will be deemed adequate and data flows to those companies will continue;
  • Member State requirements for prior approval of data transfers either will be waived or approval will be automatically granted; and
  • Claims brought by European citizens against U.S. companies will be heard in the U.S. subject to limited exceptions.

The safe harbor framework offers a simpler and cheaper means of complying with the adequacy requirements of the Directive, which should particularly benefit small and medium enterprises.

An EU organization can ensure that it is sending information to a U.S. organization participating in the safe harbor by viewing the public list of safe harbor organizations posted on this website. This list contains the names of all U.S. companies that have self-certified to the safe harbor framework. This list will be regularly updated, so that it is clear who is assured of safe harbor benefits.


The decision by U.S. organizations to enter the safe harbor is entirely voluntary. Organizations that decide to participate in the safe harbor must comply with the safe harbor's requirements and publicly declare that they do so. To be assured of safe harbor benefits, an organization needs to self certify annually to the Department of Commerce in writing that it agrees to adhere to the safe harbor's requirements, which includes elements such as notice, choice, access, and enforcement. It must also state in its published privacy policy statement that it adheres to the safe harbor. The Department of Commerce will maintain a list of all organizations that file self-certification letters and make both the list and the self-certification letters publicly available.

To qualify for the safe harbor, an organization can (1) join a self-regulatory privacy program that adheres to the safe harbor's requirements; or (2) develop its own self-regulatory privacy policy that conforms to the safe harbor.


Organizations must comply with the seven safe harbor principles. The principles require the following:


Organizations must notify individuals about the purposes for which they collect and use information about them. They must provide information about how individuals can contact the organization with any inquiries or complaints, the types of third parties to which it discloses the information and the choices and means the organization offers for limiting its use and disclosure.


Organizations must give individuals the opportunity to choose (opt out) whether their personal information will be disclosed to a third party or used for a purpose incompatible with the purpose for which it was originally collected or subsequently authorized by the individual. For sensitive information, affirmative or explicit (opt in) choice must be given if the information is to be disclosed to a third party or used for a purpose other than its original purpose or the purpose authorized subsequently by the individual.

Onward Transfer (Transfers to Third Parties)

To disclose information to a third party, organizations must apply the notice and choice principles. Where an organization wishes to transfer information to a third party that is acting as an agent(1), it may do so if it makes sure that the third party subscribes to the safe harbor principles or is subject to the Directive or another adequacy finding. As an alternative, the organization can enter into a written agreement with such third party requiring that the third party provide at least the same level of privacy protection as is required by the relevant principles.


Individuals must have access to personal information about them that an organization holds and be able to correct, amend, or delete that information where it is inaccurate, except where the burden or expense of providing access would be disproportionate to the risks to the individual's privacy in the case in question, or where the rights of persons other than the individual would be violated.


Organizations must take reasonable precautions to protect personal information from loss, misuse and unauthorized access, disclosure, alteration and destruction.

Data integrity

Personal information must be relevant for the purposes for which it is to be used. An organization should take reasonable steps to ensure that data is reliable for its intended use, accurate, complete, and current.


In order to ensure compliance with the safe harbor principles, there must be (a) readily available and affordable independent recourse mechanisms so that each individual's complaints and disputes can be investigated and resolved and damages awarded where the applicable law or private sector initiatives so provide; (b) procedures for verifying that the commitments companies make to adhere to the safe harbor principles have been implemented; and (c) obligations to remedy problems arising out of a failure to comply with the principles. Sanctions must be sufficiently rigorous to ensure compliance by the organization. Organizations that fail to provide annual self certification letters will no longer appear in the list of participants and safe harbor benefits will no longer be assured.

To provide further guidance, the Department of Commerce has issued a set of frequently asked questions and answers (FAQs) that clarify and supplement the safe harbor principles.


In general, enforcement of the safe harbor will take place in the United States in accordance with U.S. law and will be carried out primarily by the private sector. Private sector self-regulation and enforcement will be backed up as needed by government enforcement of the federal and state unfair and deceptive statutes. The effect of these statutes is to give an organization's safe harbor commitments the force of law vis a vis that organization.

Private Sector Enforcement

As part of their safe harbor obligations, organizations are required to have in place a dispute resolution system that will investigate and resolve individual complaints and disputes and procedures for verifying compliance. They are also required to remedy problems arising out of a failure to comply with the principles. Sanctions that dispute resolution bodies can apply must be severe enough to ensure compliance by the organization; they must include publicity for findings of non-compliance and deletion of data in certain circumstances. They may also include suspension from membership in a privacy program (and thus effectively suspension from the safe harbor) and injunctive orders.

The dispute resolution, verification, and remedy requirements can be satisfied in different ways. For example, an organization could comply with a private sector developed privacy seal program that incorporates and satisfies the safe harbor principles. If the seal program, however, only provides for dispute resolution and remedies but not verification, then the organization would have to satisfy the verification requirement in an alternative way.

Organizations can also satisfy the dispute resolution and remedy requirements through compliance with government supervisory authorities or by committing to cooperate with data protection authorities located in Europe.

Government Enforcement

Depending on the industry sector, the Federal Trade Commission, comparable U.S. government agencies, and/or the states may provide overarching government enforcement of the safe harbor principles. Where a company relies in whole or in part on self-regulation in complying with the safe harbor principles, its failure to comply with such self regulation must be actionable under federal or state law prohibiting unfair and deceptive acts or it is not eligible to join the safe harbor. At present, U.S. organizations that are subject to the jurisdiction of the Federal Trade Commission or the Department of Transportation with respect to air carriers and ticket agents may participate in the safe harbor. The Federal Trade Commission and the Department of Transportation with respect to air carriers and ticket agents have both stated in letters to the European Commission that they will take enforcement action against organizations that state that they are in compliance with the safe harbor framework but then fail to live up to their statements.

Under the Federal Trade Commission Act, for example, a company's failure to abide by commitments to implement the safe harbor principles might be considered deceptive and actionable by the Federal Trade Commission. This is the case even where an organization adhering to the safe harbor principles relies entirely on self-regulation to provide the enforcement required by the safe harbor enforcement principle. The FTC has the power to rectify such misrepresentations by seeking administrative orders and civil penalties of up to $12,000 per day for violations.

Failure to Comply with the Safe Harbor Requirements: If an organization persistently fails to comply with the safe harbor requirements, it is no longer entitled to benefit from the safe harbor. Persistent failure to comply arises where an organization refuses to comply with a final determination by any self regulatory or government body or where such a body determines that an organization frequently fails to comply with the requirements to the point where its claim to comply is no longer credible. In these cases, the organization must promptly notify the Department of Commerce of such facts. Failure to do so may be actionable under the False Statements Act (18 U.S.C. § 1001).

The Department of Commerce will indicate on the public list it maintains of organizations self certifying adherence to the safe harbor requirements any notification it receives of persistent failure to comply and will make clear which organizations are assured and which organizations are no longer assured of safe harbor benefits.

An organization applying to participate in a self-regulatory body for the purposes of re-qualifying for the safe harbor must provide that body with full information about its prior participation in the safe harbor.

Data Privacy Links

ITA Privacy Policy


European Union Data Protection Resources:

Codes of Conduct/Privacy Frameworks:

Online Privacy Alliance

The alliance has developed guidelines for creating an effective privacy policy, establishing enforcement mechanisms, and protecting children's privacy online. The alliance is comprised of more than 40 global corporations and associations.

Privacy Leadership Initiative (PLI)

PLI has developed model practices for the exchange of personal information between business and consumers. Comprised of more than 20 companies and associations.

Network Advertising Initiative

Created by leading online advertisers engaged in "online profiling". Sets forth self-regulatory principles for online advertisers to protect consumers' privacy while engaging in online advertising.

Global Business Dialogue on Electronic Commerce (GBDe)

A worldwide, CEO-led, business initiative, established in January 1999 to assist in the creation of a policy framework for the development of a global online economy. Has developed personal Data Protection Guidelines for online merchants, trustmark providers, and any other businesses.

AICPA/CICA Privacy Framework

The Assurance Services Executive Committee (ASEC) of the American Institute of Certified Public Accountants (AICPA) and the Assurance Services Development Board (ASDB) of the Canadian Institute of Chartered Accountants (CICA) have issued an exposure draft of a proposed Privacy Framework. The proposed Framework provides criteria and related material for protecting the privacy of personal information and can be used by certified public accountants (CPAs) in the United States and chartered accountants (CAs) in Canada, both in industry and in public practice, to guide and assist the organizations they serve in implementing privacy programs.

Privacy Policy Generator Tools:

Organization for Economic Cooperation and Development (OECD)

Electronic commerce is a central element in the OECD's vision of the potential that the networked world holds for sustainable economic growth, more and better jobs, expanding world trade, and improved social conditions.

Direct Marketing Association (DMA)

This tool has been developed to help marketers create policies that are consistent with The DMA's Privacy Principles for Online Marketing.

Privacy "Seal" Programs/Verification (and/or Audit) Services:


TRUSTe is an independent, non-profit privacy organization whose mission is to build users' trust and confidence on the Internet and, in doing so, accelerate growth of the Internet industry. TRUSTe was founded by the Electronic Frontier Foundation (EFF) and the CommerceNet Consortium, who act as independent, unbiased trust entities.

The Direct Marketing Association (The DMA)

The Direct Marketing Association (The DMA) is the largest trade association for businesses interested in interactive and database marketing. Companies displaying The DMA Member logo have committed to the association's Privacy Promise. The DMA's Privacy Promise is an assurance to consumers that U.S. marketers who are DMA members will use personal information in a manner that respects consumers'wishes.

AICPA WebTrust

The WebTrust program is a set of e-commerce standards comprised of prevailing best practices and requirements from around the world; an independent verification that a site meets the standards; and a web trust seal.


SquareTrade's mission is to build trust in transactions and to create a better online trading experience. SquareTrade's services aim to help buyers identify trustworthy sellers they can buy from safely, as well as help good sellers show buyers that they can be trusted.

Entertainment Software Rating Board (ESRB)

ESRB Privacy Online addresses consumers' concerns regarding privacy by requiring Web publishers to develop and implement privacy policies and practices for their websites.

Alternative Dispute Resolution (Independent Recourse) Mechanisms:

In addition to the "seal" programs listed above, the following organizations provide dispute resolution services for their members/clients:

American Arbitration Association

The American Arbitration Association is available to resolve a range of disputes through mediation, arbitration, elections and other out-of-court settlement procedures. The American Arbitration Association assists in the design of ADR systems for corporations, unions, government agencies, law firms and the courts.


JAMS provides the highest quality dispute resolution services to our clients and to our local, national and global communities. JAMS' neutrals include the ADR industry's most respected mediators, arbitrators, private judges, facilitators, special masters (or referees) and neutral advisors.

Privacy Protection Training/Awareness:

U.S. Federal Trade Commission

Provides public information on privacy compliance initiatives and safeguards.


ISP organization that educates parents on tools and measures to protect their children's privacy and security online.

Center for Democracy and Technology and the Privacy Leadership Initiative

Created "privacy toolboxes" for online users, which are posted on their websites. These "toolboxes" typically tell users how they can limit disclosure of their personal information, what choices they have about how such information is used and shared, and under what circumstances they can access it.

Website provides means of consumer reporting in Internet privacy complaints and those relating to cross-border e-commerce transactions.

ITA Website Endorsement Policy

Links to websites outside the U.S. Federal Government, or the use of trade, firm or corporation names with the International Trade Administration websites, are for the convenience of the user. Such use does not constitute an official endorsement or approval by the U.S. Commerce Department of any private sector website, product or service.