Why Firms Need Compliance Built for Machine-Speed Operations

Remember when companies could tweak a privacy policy and coast for a few years? That era is over.

A new wave of state-level data privacy laws is landing faster than firms can process, reshaping the compliance landscape, particularly across eCommerce and healthcare, into a high-stakes game of regulatory catch-up.

As of reporting, there are 15 states with sweeping consumer privacy laws in force. Tennessee and Minnesota, for example, joined the ranks in July. Maryland is coming up this October. By early the next year, at least three more states (Rhode Island, Kentucky and Indiana) are expected to launch their own detailed data privacy regimes.

These laws differ in surprising and important ways. While some laws focus heavily on children’s data, biometrics or geolocation, others stress the obligations of data brokers, or require specific governance, such as naming a privacy officer. For example, Minnesota’s law requires controllers not only to assign a chief privacy officer (or an equivalent individual) but also to notify consumers of material changes to privacy policy and give them the chance to withdraw consent for changed processing of previously collected personal data.

This multiplicity of regimes means that one “template” or one universal compliance policy is unlikely to satisfy all legal risks in all states. To keep up, businesses are being forced to reconceive compliance as a dynamic, real-time discipline, supported by automation, artificial intelligence (AI) continuous monitoring, and an operational mindset that mirrors the velocity of the technology it governs.

See also: AI Leapfrogs, Not Incremental Upgrades, Are New Back-Office Approach

The Patchwork Problem of US Oversight

There are 50 states. That means businesses need to start thinking in terms of 50 standards.  From geolocation to Gen Alpha data, biometric storage and data brokers, legislatures are redrawing the rules state by state, and often in ways that don’t match one another.

This lack of uniformity complicates matters. California’s definition of sensitive personal information is not Colorado’s. Utah’s rules for data consent are not Virginia’s. Enforcement provisions vary, as do penalties, thresholds for applicability and carveouts for certain industries.

States such as California, Connecticut and Texas are already bringing actions under their respective privacy regimes. These regulators are emphasizing that compliance with one jurisdiction’s law does not excuse non-compliance with another’s unique requirements

“Compliance and regulations were usually primarily driven by laws and rules,” Raul Leyva, vice president of issuing solutions at Visa DPS, told PYMNTS in an interview posted Sept. 2. Now, “regulators use the law and official rules [as well as] consent orders, examiner guides, official interpretations and other less formal processes, which makes it more difficult to keep abreast of changes.”

Because the laws are shifting so quickly, companies need to shift their compliance posture from “set and forget” to “monitor and adapt.” Policies drafted a year ago, or even six months ago, may be out of date in crucial respects.

That lack of harmony creates not just additional paperwork, but operational friction.

Read more: Compliance Moved From Cost Center to Growth Engine in 2024

Looking Ahead Toward a New Compliance Mindset

The future of privacy regulation in the United States is unlikely to grow simpler. Federal legislation remains elusive, and states show no signs of slowing their momentum. If anything, the range of issues under scrutiny will expand, encompassing not only traditional data categories but also artificial intelligence, algorithmic transparency, and emerging technologies that challenge existing definitions of personal information.

As that frontier advances, companies that cling to slow, manual compliance processes may find themselves perpetually behind.

The deeper challenge is not merely volume but velocity. Privacy laws are being written and enacted at a pace that far outstrips the cycles of corporate governance. It is no longer unusual for a state legislature to pass a comprehensive law in one session, promulgate rules within a year and enforce them the next. In political terms, that is warp speed.

Rather than relying on policy documents and periodic training, firms are turning to technical architectures that automate compliance. Data discovery tools scan for sensitive information, ensuring it is stored and shared in accordance with applicable laws. Consent management platforms dynamically update user choices across systems. Real-time monitoring tools flag potential violations before regulators do.

The goal is not to eliminate human oversight, but to augment it.

In effect, compliance must operate at machine speed. Firms must be capable of identifying new requirements, mapping them against existing processes and deploying changes rapidly enough to keep pace with lawmakers and regulators. Anything less exposes them to legal liability, reputational risk and operational breakdowns.

Register for the upcoming B2B PYMNTS 2025 event, “B2B.AI: The Architecture of Intelligent Money Movement,” taking place Oct. 6-31.

For all PYMNTS B2B and AI coverage, subscribe to the daily B2B and AI Newsletters.