Untangling the Complex Patchwork of State Data Privacy Regulations

July 22, 2025

By Amy Miller, Assistant General Counsel

For more than a decade, complying with data privacy laws has presented a significant challenge for U.S. financial services leaders. Without a unified federal law like Europe’s General Data Protection Regulation (GDPR), financial institutions are left to navigate a patchwork of state-level privacy regulations. Wildly varying state laws create particular compliance issues for credit unions with multistate memberships, a growing segment fueled by interstate mergers and acquisitions.

However, there are ways to lessen the stress of compliance in this fragmented landscape. Here are a few practices that work well for credit unions that operate in multiple states:

Identify Exemptions

Your credit union may be exempt from certain state privacy laws. If, for instance, your cooperative is already subject to the Gramm-Leach-Bliley Act (GLBA) or other federal regulations that include data protection provisions, those federal standards may preempt overlapping state requirements. Exemptions vary by state, however. It’s critical to review each law individually.

Look for Common Themes

If multiple state laws apply to your credit union, find common themes. This will go a long way in reducing complexity in the development of policies and procedures. For example, many states require clear consumer disclosures. Ensuring your baseline policies include standardized disclosures makes it easier to satisfy multiple mandates at once.

Shoot for the Highest Standard

Because some states may be stricter than others, consider building your governance framework to meet the rules of the strictest state. This improves the likelihood of meeting all applicable state obligations in one fell swoop. That said, it remains essential to review each relevant state law individually to ensure compliance.

Collaborate with IT

Understanding the rules is one thing; ensuring your data architecture can achieve compliance is another. Partner with your IT team to get a clear picture of how personally identifiable information (PII) and other covered data enters your network, where it’s stored and who — whether that’s internal staff or third-party vendors — has access to it. This foundational knowledge is essential for developing policies and procedures aligned with your overall data governance strategy. Work together to implement strong controls, like role-based access, adopt sound practices, like regular audit logging, and deploy effective technologies, such as automated data retention tools.

Assign Ownership

Data privacy laws are continually evolving. For this reason, it’s crucial to designate point people, across both IT and compliance, who are responsible for monitoring ongoing legal and regulatory changes. Generally states provide a runway of several months to several years for implementation before the law is enforced, so staying on top of changes is both essential and possible. Make the jobs of point people easier by connecting them with good resources. Several organizations, such as the International Association of Privacy Professionals (IAPP), offer tools to monitor new rules and actions under consideration across jurisdictions.

Cross Functional Collaboration is Key

Privacy obligations don’t rest solely with the compliance team. Today, every department that handles personal data — most, if not all, departments within a credit union — shares responsibility for upholding privacy standards. Each department must understand the credit union’s data privacy policies and procedures, and importantly, have the ability to execute them.

With the pace of state data privacy regulation showing no signs of slowing, the credit union chief compliance officer (CCO) is likely to welcome support, especially from peers with deep expertise in data systems and security, like chief information security officers (CISOs) and chief data officers (CDOs). Together, these senior leaders can form a highly effective partnership, aligning technical and regulatory perspectives to execute against a more unified governance, risk and compliance (GRC) strategy.

Working together, credit union department heads have a much better shot at maintaining a proactive GRC response. Meeting regularly helps teams identify regulatory impacts early, brainstorm solutions and implement them well before the all-important effective dates.

Chin Up — You’re Not Alone

If you find yourself tangled in a web of state data privacy regulations, rest assured. You’re in good company. Many credit unions are navigating the same complexities, especially as their memberships increasingly cross state lines.

Fortunately, data privacy has become something of a standard business practice now, creating many resources. There’s no need to create a roadmap on your own. Leverage your association and league memberships, technology and cybersecurity vendors and the other credit union people in your networks. If there’s one thing that’s held steady within the credit union movement, even through massive regulatory evolution, it’s an unwavering spirit of collaboration.

 Originally published in CUInsight on July 10, 2025.