Sensitive data, from biometrics to location trails, has become a high-value target in a world of evolving cybersecurity threats and increasing data flows across borders. The U.S. response? The Protecting Americans’ Data from Foreign Adversaries Act of 2024 (PADFA), a crucial tool designed to stop foreign adversaries from exploiting American data, including data about military personnel. PADFA is an essential piece of legislation that privacy, compliance, technology, and security professionals must understand and navigate effectively.
Understanding PADFA: Scope and intent
PADFA was passed in 2024 to prevent data brokers from transferring personally identifiable sensitive data of U.S. individuals to foreign adversary countries or entities controlled by them. The countries currently designated as foreign adversaries include China, Russia, Iran, and North Korea. This designation may be updated by the U.S. government over time.
The Act aims to mitigate national security risks by restricting the flow of sensitive data that could be exploited by these nations. It reflects growing concerns over how foreign entities might use personal data for espionage, surveillance, or other malicious purposes.
Key definitions: Who and what is affected?
Data broker
Under PADFA, a data broker is defined as an entity that, for valuable consideration, sells, licenses, rents, trades, transfers, releases, discloses, provides access to, or otherwise makes available data of U.S. individuals that the entity did not collect directly from such individuals to another entity that is not acting as a service provider.
This broad definition captures many businesses, including those that aggregate and sell data without direct consumer relationships. Importantly, PADFA is not limited to U.S.-based companies. Any entity, domestic or foreign, that qualifies as a data broker and handles U.S. individuals’ sensitive data may be subject to the law if it transacts with a foreign adversary or an entity under its control. This extraterritorial reach mirrors other global data regulations and underscores the need for international organizations to assess their exposure.
Personally identifiable sensitive data
The Act defines personally identifiable sensitive data as any sensitive data that identifies or is linked or reasonably linkable, alone or in combination with other data, to an individual or a device that identifies or is linked or reasonably linkable to an individual.
This includes, but is not limited to:
- Government-issued identifiers (e.g., Social Security numbers)
- Financial account numbers
- Biometric and genetic information
- Health related information, including mental health
- Precise geolocation data
- Private communications (e.g., texts, emails)
- Calendar or address book information, phone or text logs, photos, audio recordings, or videos, maintained for private use by an individual
- Information about individuals under the age of 17
- Information about an individual’s online activity over time and across websites or online services
- An individual’s military status
Controlled by a foreign adversary
An entity is considered “controlled by a foreign adversary” if it is:
- Domiciled in, headquartered in, has its principal place of business in, or is organized under the laws of a foreign adversary country;
- Directly or indirectly owned at least 20% by a foreign person from a foreign adversary country; or
- Subject to the direction or control of such a foreign person or entity.
PADFA also gives regulators discretion to expand or revise what qualifies as “sensitive data” or a “foreign adversary” over time. This built-in flexibility makes it critical for organizations, especially those operating internationally, to stay alert to regulatory updates and emerging enforcement trends.
Enforcement mechanisms and penalties
The Federal Trade Commission (FTC) is responsible for enforcing PADFA. Violations are treated as unfair or deceptive acts or practices under the Federal Trade Commission Act. The FTC has the authority to seek civil penalties of up to $50,120 per violation.
Given the significant financial implications, organizations must ensure strict compliance to avoid substantial penalties.
PADFA does not include a private right of action; thus, individuals cannot file lawsuits under the Act. Enforcement lies solely with the FTC. Still, organizations may face reputational fallout or regulatory scrutiny from watchdog groups and international partners for noncompliance.
Implications for privacy and compliance professionals
Privacy professionals play a critical role in ensuring organizational compliance with PADFA. Key responsibilities and steps privacy professionals should take include:
1. Assessing data broker status
Determine whether your organization qualifies as a data broker under PADFA. This includes evaluating how your organization collects, sources, and shares data with third parties, especially those not acting as service providers.
Unlike some state-level data broker laws (like in California and Vermont), PADFA does not require data brokers to register in a national database yet.
However, federal registration requirements have been proposed in parallel legislation, so this could change.
2. Flag high-risk data sharing scenarios
Pay special attention to scenarios involving programmatic advertising, third-party analytics, or cloud infrastructure with international dependencies. These indirect data pathways are often overlooked but may still fall within PADFA’s scope if they expose sensitive data to foreign adversaries.
3. Reviewing data flows
Map out data flows to identify any transfers of personally identifiable sensitive data to foreign entities. Ensure that data is not inadvertently shared with entities controlled by foreign adversaries.
4. Updating contracts and agreements
Review and update contracts with third parties to include clauses that prohibit the transfer of sensitive data to foreign adversaries. Implementing robust contractual safeguards is essential.
5. Implementing monitoring mechanisms
Establish monitoring systems to track data transfers and detect any unauthorized sharing of sensitive data. Regular audits can help maintain compliance.
6. Engaging legal counsel
Consult with suitable legal counsel to assess PADFA’s provisions and to develop comprehensive compliance strategies.
Distinguishing PADFA from Executive Order 14117
While both PADFA and Executive Order 14117 aim to protect Americans’ sensitive data from foreign adversaries, they differ in scope and enforcement:
- PADFA: Legislative act focusing on data brokers, enforced by the FTC, with civil penalties for violations.
- Executive Order 14117: Presidential directive with broader applicability, including various entities handling sensitive data, enforced by the Department of Justice, and includes both civil and criminal penalties.
Understanding these distinctions is important for organizations to ensure comprehensive compliance. For a deeper dive into EO 14117 including covered data types, enforcement timelines, and how to operationalize DOJ compliance, read our full breakdown of Executive Order 14117 and what it means for sensitive data, AI risk, and national security.
Meet PADFA Head-On with Smart Strategy and Strong Governance
The Protecting Americans’ Data from Foreign Adversaries Act of 2024 represents a significant shift in the U.S. data privacy landscape, focusing on national security. By proactively assessing data practices, updating policies, and engaging with legal counsel, organizations can navigate PADFA confidently and effectively.
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