Is Your Compliance Blind Spot Putting Your Business at Risk?

What are the most common compliance requirements small businesses miss, and how much can noncompliance really cost?

Many small businesses overlook critical compliance requirements under HIPAA, PCI DSS, and the FTC Safeguards Rule — and fines can easily reach into the hundreds of thousands for each violation.

Think compliance is only a “big company problem”? Think again. Regulators aren’t just targeting Fortune 500s, they’re coming after small and mid-sized businesses (SMBs) in Washington and Oregon, too. And the fines? They can wipe out months (or years) of profit in a single blow. 

Why Small Businesses Can No Longer Ignore Compliance 

Agencies like the Federal Trade Commission (FTC), the Payment Card Industry Security Standards Council (PCI SSC), and the Department of Health and Human Services (HHS), are tightening the screws on data protection and consumer privacy. 

For small businesses, noncompliance isn’t just about paying a fine. It’s about: 

• Losing the trust of your customers. 
• Facing reputational damage that follows you for years. 
• Spending thousands recovering from preventable mistakes. 

FTC Safeguards Rule — What You Really Need to Know 

If you collect financial information, the FTC Safeguards Rule applies.  

Who Must Comply 

• The Rule applies to financial institutions, not just banks. Tax prep firms, mortgage brokers, credit counselors, and even “finders” (companies that bring buyers and sellers together) can be covered. 

• Exemptions apply if you maintain customer data for fewer than 5,000 consumers, but most growing SMBs will still fall under compliance requirements. 

What’s Required Under the FTC Safeguards Rule

The FTC Safeguards Rule mandates a written information security program with nine key elements: 

1. Appoint a Qualified Individual
   Assign someone with the authority and expertise to oversee your information security program. This person can be internal, part of an affiliate, or an external provider, but they must have real accountability for keeping your safeguards in place.
2. Conduct a Written Risk Assessment
   Before you can protect your data, you need to understand what you have and where it lives. Map out the customer information your business collects and stores, identify risks to its security and confidentiality, document your findings, and update regularly as threats evolve.
3. Design and Implement Safeguards
   Put practical protections in place based on your risk assessment. This includes encryption, access controls, secure app development, data disposal policies, and multi-factor authentication (MFA) for any system that handles customer information. 
4. Monitor and Test Your Defenses 
   Security isn’t “set it and forget it.” Continuously monitor your systems or, at a minimum, perform annual penetration testing and biannual vulnerability scans, and retest whenever major changes occur.
5. Train Your Employees 
   Your team is your first line of defense. Provide ongoing cybersecurity and data-handling training, tailored to each employee’s role and level of access.
6. Oversee Your Service Providers
   Make sure any vendors or contractors who handle customer data are upholding the same standards you are. Vet them before onboarding, include security expectations in contracts, and reassess their compliance regularly.
7. Keep Your Program Current
   As your business grows and technology changes, so do your risks. Review and adjust your security program whenever you add new systems, expand operations, or face emerging threats.
8. Develop an Incident Response Plan
   Have a written plan for what to do if a security event occurs. It should define roles, communication steps, containment procedures, and how you’ll fix vulnerabilities and prevent recurrence.
9. Report to Leadership
   Your Qualified Individual must provide a written report, at least annually, to your board or senior leadership outlining your program’s effectiveness, test results, incidents, and recommendations for improvement.

Breach Notification Requirement (2024 Amendment) 

As of May 2024, covered businesses must report certain security breaches to the FTC: 

• Incidents must be reported within 30 days of discovery. 
• Applies to breaches affecting 500+ consumers where unencrypted data (or encryption keys) are acquired by an unauthorized party. 
• Reports are submitted via the FTC’s online form and may be made public. 

Penalties 

Businesses can face fines up to $100,000 per violation, and individuals (officers/executives) up to $10,000 per violation. In some cases, ongoing violations can lead to daily penalties of ~$43,000. 

HIPAA: Protecting Health Information 

If your business handles or transmits protected health information (PHI), you must comply with HIPAA’s Privacy, Security, and Breach Notification Rules.  

Enforcement & Penalties 

When it comes to HIPAA, regulators don’t just write rules, they enforce them with real financial consequences. 

• Since April 2003, HHS’ Office for Civil Rights (OCR) has received over 374,321 HIPAA complaints and imposed penalties in 152 cases, totaling $144,878,972.  

• In Washington, Cascade Eye & Skin Centers paid $250,000 after a ransomware attack exposed patient data.  

• HIPAA civil fines currently range from $141 to $2,134,831 per violation.  

Security Rule Safeguards 

HIPAA’s Security Rule lays out the guardrails every business must follow to protect electronic health data. 

• Administrative: risk assessments, workforce training, incident response planning. 

• Physical: facility access controls, workstation/device safeguards. 

• Technical: access controls, audit logs, integrity checks, transmission security, encryption.  

Risk Assessment & Breach Notification 

The foundation of HIPAA compliance is knowing where your risks are, and acting fast when something goes wrong. 

• Businesses must conduct written risk analyses and update them regularly.  

• Breach notifications must be sent within 60 days to affected individuals and Health and Human Services (HHS), and sometimes the media.  

What’s Coming (2025 Proposed Updates) 

Big changes are on the horizon, with new HIPAA updates set to raise the bar on cybersecurity requirements. 

• Mandatory MFA, encryption, and incident response. 
• Annual asset inventories and audits. 
• Stronger vendor oversight and 24-hour breach reporting from business associates.  

PCI DSS: Payment Card Data Security 

If your business accepts or processes credit card transactions, you’re on the hook for PCI DSS compliance.  

What PCI DSS Requires 

The latest version, PCI DSS 4.0, took effect in March 2022 with transition requirements phased through 2025.  

Key requirements include: 

• Protect cardholder data with strong encryption and firewalls. 

• Regular network monitoring and testing (vulnerability scans and penetration tests). 

• Access controls to restrict who can view payment data. 

• Multi-factor authentication (MFA) for all accounts with access to cardholder environments. 

• Documented policies and procedures for ongoing compliance. 

Noncompliance Risks 

While specific fine amounts vary by card brand and severity, businesses can face tens of thousands of dollars in monthly penalties for ongoing noncompliance and can also result in higher transaction fees, loss of merchant account, and liability for chargebacks and fraud losses. 

The Real-World Cost of Noncompliance 

In Washington, Cascade Eye & Skin Centers was fined $250,000 after a ransomware attack exposed nearly 291,000 patient files. And in Yakima, Valley Memorial Hospital paid $240,000 when security guards snooped through hundreds of patient records without authorization.  

Both cases were enforced by the Office for Civil Rights (OCR), the division of HHS responsible for investigating HIPAA violations, imposing fines, and requiring corrective action plans. Compliance failures don’t just drain your bank account, they threaten your survival. 

5 Steps to Get Ahead of Compliance Risk 

1. Run regular risk assessments. Find weaknesses before regulators do. 
2. Strengthen security measures. Encryption, MFA, and firewalls should be the norm. 
3. Train your team. Your employees are the front line against mistakes. 
4. Build an incident response plan. Know how you’ll react if something goes wrong. 
5. Work with compliance experts. Don’t guess when the stakes are this high. 

Compliance isn’t optional anymore, it’s the difference between protecting your reputation or paying for your blind spots. 

👉 We’re offering a FREE Network Assessment to Washington and Oregon businesses. We’ll pinpoint vulnerabilities, strengthen your compliance posture, and give you peace of mind. 

About Teknologize

Teknologize is a SOC 2 Type II accredited Managed IT and Cybersecurity provider serving small to mid-sized businesses across Washington and Oregon. We deliver full-service Managed IT Support, Co-Managed IT Support, advanced Cybersecurity Solutions, and IT Compliance Services for regulated industries, including Healthcare, Financial Institutions, the Utilities Sector, Manufacturing, and Professional Services.

👉 Book a Discovery Call to see how Teknologize can support your business.

Our Offices

Tri-Cities, Washington – 509.396.6640 | Yakima, Washington – 509.396.6640

Bend, Oregon – 541.848.6072 | Seattle, Washington – 206.743.0981

Questions about your IT or Cybersecurity? Give us a call today!