Sharing Data with Third Parties: Legal, Secure, and Transparent Approaches

In this digital world, companies work in isolation. Third party vendors are a primary part of business operations, ranging from payroll processors and cloud storage providers to marketing firms and analytics platforms. But every time, you have a requirement to share personal information along with outside parties in a transparent, safe, and lawful manner.

Why does this important? Because your customers expect you, not just that you will but ensure that everyone you are working with protects their data. Mishandling data, even indirectly, can result in huge security breaches, fines from the government, and reputational damage.

So, how do companies discover the right balance—sharing information in ways that are safe and compliant while still supporting business growth?

It’s important to consider why data sharing is necessary before diving into best practices. The answer is straightforward: expertise and efficiency.

For Example:

• Healthcare providers use cloud storage services to safely store patient records
• HR teams regularly rely on payroll processors to handle salaries

In each scenario sharing sensitive or private information with outside vendors is necessary. Even though this is more convenient, risk involved. If the third party has insufficient security measures, company may still be held to liability under laws such as CCPA, GDPR, or industry-specific rules like HIPAA

Understanding the legal framework that applies to your company is the first step towards sharing data responsibly. Rules may vary from one jurisdiction to another, but common is accountability.

• GDPR (EU/UK): requires agreements with third party vendors (referred to as “data processors”) that clearly define roles, limitations on data use, and security requirements.
• California’s CCPA/CPRA: Provides customers the option to opt out and requires transparency when data is “sold” or “shared” with service providers.
• Business Associate Agreements (BAAs) are important before sharing protected health information under HIPAA (U.S. healthcare).

It is not only dangerous but also expensive to disregard these requirements.

Not every vendor is made equal. Do your research before sharing data.

• Do security procedures encrypt data? Have they been audited independently?
• Do they hold HIPAA, SOC 2, or ISO 27001 certifications?
• Have there been any prior breaches? Choosing a babysitter for your child is a useful example. You wouldn’t entrust your child to a stranger; instead, you would investigate their references, inquire about their background, and make sure they are reliable. Data should be examined with the same rigor.

Verbal agreements are insufficient, even if you have faith in the vendor. The parameters for handling data are established by formal contracts. This could be in the form of a Business Associate Agreement or a Data Processing Agreement depending on the regulations.

• What information is being shared and why;
• Security precautions needed;
• Both parties’ rights and responsibilities;
• Timelines for breach notifications

You should not share all of your information just because you can. By the data minimization principal risk is decreased.

• Just the information required for the vendor to complete their job should be shared.
• Don’t give a courier the customer’s complete purchase history, for instance, if they only need the customer’s name, address, and phone number. If something goes wrong, the possible fallout is less if you share less data.
• Whenever feasible, encrypt data both in transit and at rest to provide an additional degree of security.

Sharing data is not a “set it and forget it” task. Frequent oversight guarantees that suppliers keep their end of the agreement. This may entail:

• Security evaluations or audits conducted annually
• Examining certifications or compliance reports
• Needing updates following major operational changes

Transparency fosters trust and is more than just a legal requirement. Consumers are curious about who is sharing their information and how it is being used. A few doable strategies to maintain transparency are:

• Providing customers with choices or opt-out options when necessary;
• Providing updates to privacy notices to clearly list third-party categories; and
• Proactively informing clients if new partnerships entail increased data sharing.

A possible worry can be transformed into confidence with an open and sincere explanation of data-sharing procedures. When customers feel informed instead of taken by surprise, they are much more forgiving.

Sharing data responsibly equals to sharing trust. Sharing data with third parties is regularly required for the business growth, effectiveness, and innovation. But every exchange carries some responsibility. You can ensure that your organization not only complies with the law but also gains lasting trust by vetting vendors, putting agreements, limiting what is shared, keeping an eye on ongoing procedures.

After all, trust is just as valuable as data in the digital world. Companies that take good care of both will always be ahead of the curve.

Azpirantz helps organizations establish strong, compliant, and transparent processes for sharing data with third-party vendors. Through its Data Privacy Services, Azpirantz assists in evaluating vendor security practices, conducting due diligence checks, and ensuring that appropriate agreements, such as Data Processing Agreements (DPAs) and Business Associate Agreements (BAAs) are in place. The team supports organizations in applying data-minimization principles, defining secure data-transfer methods, and setting up ongoing monitoring or audit mechanisms to verify that vendors continue to meet regulatory and security requirements. By building clear processes and documentation, Azpirantz enables businesses to reduce risks, maintain accountability, and manage third-party relationships in a legally compliant and responsible manner.

*This content has been created and published by the Azpirantz Marketing Team and should not be considered as professional advice. For expert consulting and professional advice, please reach out to [email protected].