How embedding privacy into your systems from day one is no longer just good ethics — it’s smart business and increasingly smart compliance.
Introduction
In a world where data breaches make headlines weekly, and regulators are scrutinizing how businesses collect, use, and share personal information, “Privacy by Design” has moved from an academic concept to an operational imperative. For companies operating in the United States — where a patchwork of federal and state privacy laws continues to expand (expand like waistlines around Thanksgiving) — understanding and implementing Privacy by Design is one of the most proactive steps an organization can take. But what exactly is Privacy by Design? Where did it come from? And how does it align with the growing web of U.S. data privacy requirements? This post breaks it all down.
What Is Privacy by Design?
Privacy by Design (PbD) is a framework developed in the 1990s by Dr. Ann Cavoukian, then Privacy Commissioner of Ontario, Canada. I know…Canada, but hey, the U.S. beat them twice for Gold in Hockey at the 2026 Olympics! The core premise of Privacy by Design is elegantly simple: privacy should be baked into the design of systems, processes, and products from the very beginning — not bolted on as an afterthought.
Rather than treating privacy as a compliance checkbox to be handled by a legal team after a product is built, PbD calls on engineers, product managers, designers, and executives to integrate privacy considerations into every stage of the development lifecycle. The concept gained international recognition when it was unanimously adopted as a global privacy standard by the International Assembly of Privacy Commissioners and Data Protection Authorities in 2010. Today, it forms the philosophical backbone of major privacy regulations worldwide, including the EU’s General Data Protection Regulation (GDPR) and, increasingly, U.S. state-level privacy laws.
The Seven Foundational Principles of Privacy by Design
Dr. Cavoukian articulated seven principles that define PbD. Together, they paint a picture of what truly privacy-respecting systems look like. They also make sense from a practical perspective.
1. Proactive, Not Reactive — Preventative, Not Remedial
The first principle is the spirit of the entire framework. PbD anticipates privacy risks before they materialize rather than responding to incidents after the fact. It calls on organizations to identify and address potential privacy harms early in the design process, rather than after a breach or a regulatory complaint forces their hand.
In practical terms, this means conducting Privacy Impact Assessments (PIAs) before launching new products or processing activities, rather than scrambling to explain a privacy failure to regulators down the line.
2. Privacy as the Default Setting
Under this principle, if a user does nothing — if they simply start using a product without adjusting any settings — their personal data should still be maximally protected. Privacy-protective defaults should be the standard state of any system, not something users have to opt into. I am often shocked by how little Privacy is considered before a new product or service is launched.
This directly challenges the common practice of pre-ticking consent boxes, defaulting to broad data sharing, or requiring users to navigate complex privacy menus to protect themselves. The burden should be on the organization to justify data collection, not on the user to prevent it.
3. Privacy Embedded into Design
Privacy is not a feature or an add-on — it is a core component of the system’s architecture. This principle calls for integrating privacy at the technical and organizational level so that it becomes inseparable from the product’s functionality.
This might mean building encryption into a data storage system, designing a database schema that avoids storing unnecessary personal data, or structuring access controls so that employees can see only the minimum data they need to do their jobs.
4. Full Functionality — Positive-Sum, Not Zero-Sum
A common misconception is that strong privacy requires a sacrifice in functionality. PbD rejects this false choice. The goal is to achieve both strong privacy and full system functionality — a “win-win,” not a trade-off.
This principle challenges designers to find creative solutions that serve business objectives without compromising user privacy.
5. End-to-End Security — Full Lifecycle Protection
Privacy requires strong security throughout the entire lifecycle of data — from the moment it is collected to the moment it is permanently deleted. This principle emphasizes that data must be securely managed at every point, including during transmission, storage, processing, and disposal.
It also highlights the importance of retention policies. Data that is no longer needed should be securely and irreversibly destroyed. Keeping data indefinitely “just in case” is a privacy risk, not a prudent practice. The mounting number of data breaches and the growing financial impact are evidence enough of the importance of this principle.
6. Visibility and Transparency — Keep It Open
Organizations must be transparent about their data practices. Users should be able to verify that their information is being handled as promised, and the organization’s systems and policies should be independently verified.
This principle supports the use of plain-language privacy notices, accessible user controls, and audit mechanisms that allow both internal teams and external regulators to confirm that privacy commitments are upheld in practice—not just on paper.
7. Respect for User Privacy — Keep It User-Centric.
At the center of PbD is the human being whose data is being processed. Organizations must design their systems with genuine respect for user interests, giving individuals meaningful control over their personal information. This includes offering strong privacy defaults, providing clear opt-out mechanisms, and honoring user preferences. This principle has become the societal norm, and it is what customers expect of the companies to which they supply their personal information.
Privacy by Design and U.S. Data Privacy Law
The United States does not yet have a single comprehensive federal privacy law. Instead, privacy is governed by a mix of sector-specific federal laws and a growing collection of state statutes. Privacy by Design intersects with this legal landscape in important and practical ways. Having strong legal counsel, like Troutman Amin LLP, on your side to guide you through the numerous and complex legal requirements is a valuable resource.
The Federal Landscape
Several federal laws create implicit or explicit expectations that align closely with PbD principles. Among them are some of the following: The Health Insurance Portability and Accountability Act (HIPAA) requires covered entities and business associates to implement administrative, physical, and technical safeguards to protect health information — a requirement that reflects PbD’s security-by-design approach. The Gramm-Leach-Bliley Act (GLBA) similarly requires financial institutions (a term defined very broadly) to maintain safeguards to protect customer financial data. The Children’s Online Privacy Protection Act (COPPA) prohibits collecting personal information from children under 13 without verifiable parental consent, creating strong default protections that echo PbD’s privacy-as-default principle.
The Federal Trade Commission (FTC) has long championed privacy by design as a best practice. In its 2012 report, Protecting Consumer Privacy in an Era of Rapid Change, the FTC explicitly called on companies to build privacy protections into their everyday business practices and to collect only the data they need — core tenets of PbD. The FTC’s enforcement authority under Section 5 of the FTC Act, which prohibits unfair or deceptive trade practices, creates real liability for companies that fail to live up to their stated privacy commitments or that engage in data practices consumers would not reasonably expect. This report is from almost 14 years ago! If anything, this has become more applicable in the age of AI.
The State Privacy Law Wave
In the absence of federal comprehensive privacy legislation, states have moved decisively. This is where the influence of PbD principles is most visible and most consequential.
California has led the way with the California Consumer Privacy Act (CCPA), amended and strengthened by the California Privacy Rights Act (CPRA). Among its many provisions, the CPRA introduced a formal “privacy by default” requirement for sensitive personal information and authorized the California Privacy Protection Agency (NKA CalPrivacy) to issue regulations promoting privacy-protective practices. The CPRA also strengthened data minimization requirements — closely aligned with PbD’s principle of embedding privacy into design.
Virginia’s Consumer Data Protection Act (VCDPA), Colorado’s Privacy Act (CPA), Connecticut’s Data Privacy Act (CTDPA), Texas’s Data Privacy and Security Act (TDPSA), and a growing number of other state laws share common threads that reflect PbD principles, including data minimization (collect only what you need), purpose limitation (use data only for the purpose it was collected), security requirements, and the obligation to conduct data protection assessments for high-risk processing activities — a formal analog to PbD’s proactive risk assessment principle. Several of these laws also create explicit obligations regarding privacy notices and user rights (access, deletion, correction, portability, and opt-out of sale or targeted advertising), all of which are much easier to fulfill when privacy is built into systems from the start. The number of states implementing data privacy laws is ever-growing; here is one provided by the IAPP: US State Privacy Legislation Tracker.
The Business Case: Benefits of Privacy by Design
Beyond legal compliance, Privacy by Design delivers meaningful business value.
Reduced compliance costs. Listen, I am a compliance attorney, and your decision not to incorporate CbD benefits me. But seriously, at Troutman Amin, we want to do right by our clients. So if I can reduce your compliance costs by bringing light to CbD, I will. Retrofitting privacy into an existing system is exponentially more expensive than building it in from the start. Organizations that embrace PbD early avoid the costly rework, remediation projects, and rushed compliance programs that follow regulatory changes or data incidents.
Lower risk of costly breaches and enforcement actions. Data breaches are expensive — in direct costs, regulatory fines, litigation, and reputational damage. The average cost of a data breach in the U.S. continues to climb year over year. In 2025, the average cost of a data breach in the United States reached a record high of $10.22 million…OUCH!!! This marks a 9% increase from the previous year. Systems designed with strong security and minimal data collection present a smaller attack surface and a smaller liability exposure.
Regulatory agility. Privacy laws are not getting simpler, and they are not going away. Companies that have already embedded privacy principles into their operations are far better positioned to adapt to new laws as they take effect. Rather than starting from scratch with each new state law, they need only confirm that their existing practices meet new requirements — and in many cases, they already will. Especially if you hire competent legal counsel, like Troutman Amin, to assist you.
Competitive differentiation and consumer trust. Privacy has become a genuine consumer concern. Surveys consistently show that users are more likely to engage with and remain loyal to organizations they trust to handle their data responsibly. A credible commitment to privacy — one demonstrated through product design, not just a privacy policy — can be a meaningful differentiator.
Investor and partner confidence. Increasingly, institutional investors, enterprise customers, and business partners assess privacy practices as part of their due diligence. In fact, in some industries, regulators require a robust vendor oversight program. Strong data governance practices, anchored by Privacy by Design, signal organizational maturity and reduce the risk of unpleasant surprises.
Getting Started: Practical Steps
Embracing Privacy by Design does not require an overnight overhaul of existing systems. It begins with a shift in organizational culture and a few deliberate practices. Start by conducting a data inventory to understand what personal data your organization collects, why it is collected, where it lives, and how long it is retained. You cannot protect what you cannot see. From there, incorporate privacy impact assessments into your product development process — before a product launches, not after. Establish data minimization standards that define exactly what data is necessary for each processing activity, and enforce them. Train your engineering and product teams to ask “do we need this data?” as a standard part of their workflow. Review your privacy notices and user controls to ensure they are accurate, accessible, and genuinely useful to the people they are meant to serve. Utilize competent legal counsel to assist you in evaluating and developing strong policies and procedures. I humbly suggest Troutman Amin as a great choice.
Conclusion
Privacy by Design is not a silver bullet, and it is not a substitute for sound legal counsel or a robust compliance program. But it is one of the most powerful tools available to organizations that want to do right by their users, manage their risk, and build resilient, future-proof systems. In the U.S. legal environment — where state privacy laws are multiplying, FTC scrutiny is intensifying, and consumer expectations are rising — the organizations that will fare best are those that have made privacy a first-class design consideration. The question is no longer whether privacy matters. It is whether your organization is ready to build it in from the start.
Disclaimer: This blog post is for informational purposes only and does not constitute legal advice. Organizations should consult with Troutman Amin LLP or other legal counsel regarding their specific compliance obligations under applicable federal and state privacy laws.
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