Data Processing Agreement vs. Privacy Policy

Understanding the Critical Differences for Your Business

By: Charein Faraj, Esq.

In today’s AI and data-driven business landscape, understanding the distinction between a Data Processing Agreement (DPA) and a Privacy Policy isn’t just good practice, but it’s essential for legal compliance. While both documents deal with personal data protection, they serve fundamentally different purposes. Let’s break down these critical differences.

What is a Data Processing Agreement?

A Data Processing Agreement (“DPA”) is a legally binding document to be entered into in writing or electronically by the controller and the processor.[i] It regulates and outlines the scope and responsibilities between the controller and the processor.  Under GDPR Article 28, controllers must “use only processors providing sufficient guarantees to implement appropriate technical and organisational measures” when processing is carried out on their behalf.[ii] Key DPA elements include:

• • Contractual obligations with specific technical and organizational security measures

• • Data breach notification procedures and response timelines

• • Data subject rights handling procedures and responsibilities

• • International transfer mechanisms and safeguards

• • Audit rights and compliance monitoring provisions

What is a Privacy Policy?

A Privacy Policy is a public-facing document that explains to individuals how their personal data is collected, used, and protected. These are mandated under GDPR Articles 13 and 14, which establish transparency obligations requiring controllers to provide specific information to data subjects about data processing activities.[iii], [iv] Essential Privacy Policy components:

• • Identity and contact details of the data controller

• • Purposes and legal basis for processing personal data

• • Individual rights and clear instructions on how to exercise them

• • Retention periods and data sharing practices

• • Contact information for privacy inquiries and complaints

Key Differences at a Glance

Elements	DPA	Privacy Policy
Audience	Business-to-business	Business-to-individual
Legal nature	Contract	Notice/disclosure
Enforceability	Contractually binding	Regulatory compliance
Content focus	Technical safeguards	Individual transparency
Relationship	Controller-processor	Controller-data subject
Purpose	Govern data processing arrangements	Inform individuals about data use
When required	When using third-party processors	When collecting personal data

Why Both Matter for Your Business

The core distinction is that DPAs are B2B contracts governing processor relationships, while Privacy Policies are B2C disclosures providing transparency to individuals about their data. Most businesses need both documents:

• • You need a DPA when working with third-party service providers who process personal data on your behalf (cloud providers, payroll companies, marketing platforms, etc.)

• • You need a Privacy Policy when collecting personal data directly from individuals (website visitors, customers, employees, etc.)

Getting It Right: The Importance of Professional Legal Guidance

While understanding these differences is crucial, drafting compliant DPAs and Privacy Policies requires navigating complex regulatory requirements, industry-specific considerations, and evolving legal landscapes. The stakes are high, and non-compliance can result in significant regulatory penalties and reputational damage. Ready to ensure your data protection documents are compliant and comprehensive? Don’t leave your business exposed to regulatory risk. Connect with experienced privacy attorneys who can help you draft, review, and maintain both your Data Processing Agreements and Privacy Policies. Professional legal guidance ensures your documents not only meet current regulatory requirements but also adapt to the evolving privacy landscape. Contact qualified privacy attorneys today to protect your business and build trust with your customers through proper data protection compliance.

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[i] “What is a Data Processing Agreement (DPA)?” GDPR Register. https://www.gdprregister.eu/gdpr/data-processing-agreement-dpa/ [ii] Art. 28 GDPR. Processor. https://gdpr-info.eu/art-28-gdpr/ [iii] Art. 13 GDPR. Information to be provided where personal data are collected from the data subject.  https://gdpr-info.eu/art-13-gdpr/ [iv] Art. 14 GDPR. Information to be provided where personal data have not been obtained from the data subject. https://gdpr-info.eu/art-14-gdpr/