How To Handle Compliance Violations In Tech

A recent $10M settlement with the Federal Trade Commission (FTC) demonstrates that although it can be reasonable for organizations to rely on third-parties to handle compliance issues, it is still the organization's responsibility to provide the third-party with sufficient accurate information for the third-party to get compliance right. See https://lnkd.in/eMCN9Vtn. In this case, a major entertainment company faced allegations of violating the Children’s Online Privacy Protection Rule (COPPA) by mislabeling child-directed videos on a popular platform. The mislabeling enabled unlawful data collection from children under 13, triggering targeted advertising and exposure to age-inappropriate features. Despite platform-level warnings and prior enforcement actions, the company continued to rely on default settings and failed to review individual content classifications—ultimately leading to regulatory penalties and mandated reforms. This case underscores a critical lesson: outsourcing compliance tasks does not outsource accountability. Here are key tips for organizations relying on third-parties for compliance: ✅ Provide Accurate, Timely Information Third-parties can’t ensure compliance if they’re working with incomplete or outdated data. ✅ Clarify Roles and Responsibilities Ensure contracts and workflows explicitly define who is responsible for what—and when. ✅ Avoid Blanket Defaults One-size-fits-all settings (like channel-level designations) may be convenient but can lead to systemic errors. ✅ Monitor and Audit Regularly Establish review protocols to catch misclassifications or lapses before regulators do. ✅ Respond to Warnings Promptly If a platform flags issues, treat it as a compliance issue—not a suggestion. ✅ Train Internal Teams Even if external vendors handle execution, internal staff must understand the compliance landscape. ✅ Document Everything Maintain records of decisions, communications, and updates to demonstrate diligence. ✅ Stay Ahead of Tech Shifts Emerging tools like age assurance technologies may reshape compliance expectations—be proactive, not reactive. ✅ Learn from Enforcement Trends Regulatory actions offer a roadmap of what not to do. Use them to strengthen your own practices. Compliance is a shared responsibility. Don't just assume the third-party will always get it right!

You walk into work, and your inbox is flooded with urgent audit requests from regulators. Your company is being audited for compliance with ISO 27001, SOC 2, or GDPR, and leadership is looking to you to lead the response. How would you handle this situation? 1. Assess What’s Being Audited • Is this a scheduled audit or a surprise regulatory review? • What specific compliance requirements are in focus? (e.g., access controls, data protection, vendor risk). 2. Gather the Right People & Documentation • Who needs to be involved? IT, Legal, Compliance, Risk, HR? • Where’s the evidence? Are your security policies, access logs, risk assessments, and training records up-to-date? 3. Identify Gaps & Risks • Did the company miss a control requirement? • Are there unresolved security incidents or missing policies that could create audit findings? 4. Engage with the Auditors Effectively • Stick to what’s asked—don’t overshare! • Be prepared to explain policies and provide proof (e.g., pen testing reports, risk assessments, vendor agreements). 5. Develop an Action Plan • If there are gaps, what’s the corrective action plan? • Who’s responsible for ensuring the company remains compliant moving forward? If you were leading this audit response, what’s the first thing you’d do? Would you prioritize gathering documentation, identifying compliance gaps, or managing the audit conversations?

The warning letter (https://lnkd.in/eqenmXVV) highlights significant concerns about data integrity and CGMP (Current Good Manufacturing Practice) compliance. Specifically, it describes incidents of data falsification—such as operators admitting to falsifying temperature records for a drying oven that wasn’t even turned on, leading to a failed batch that did not meet residual solvent specifications. Additionally, several senior employees, including an Assistant Manager in Production, an Assistant Manager in Quality Assurance, and a Quality Control Manager, confessed to creating a backdated calculation sheet provided to the FDA investigator. The FDA found the company's response (483 response) inadequate for several reasons: ➡️ Consultant Plan: The company proposed hiring a consultant to identify data integrity gaps and develop a plan by June 30, 2025—approximately ten months after the inspection. The FDA considered this timeline too lengthy given the severity of the data integrity violations. ➡️ Employee Removal: While the company removed the involved employees from CGMP-related activities, there was no explanation of the steps taken to prevent other employees, who may have been aware of or involved in the misconduct, from repeating similar violations. ➡️ Failure to Assess Scope: The company did not adequately evaluate the full extent of the data integrity issues. The FDA noted that the company had not interviewed all relevant employees, including former staff, or thoroughly reviewed the data records. Potential Consequences: ➡️ Product Safety: The falsified data puts product safety at risk, especially considering the failed batch that did not meet safety specifications for residual solvents. ➡️ Regulatory Actions: These violations could lead to enforcement actions such as additional warnings, fines, product seizures, or even a plant shutdown, and the company will likely face closer scrutiny in future FDA inspections. Recommendations: ➡️ Immediate Corrective Actions: The company should promptly address the root causes of these data integrity issues by conducting a thorough investigation and implementing more effective oversight of data documentation practices. ➡️ Employee Training: Mandatory training on CGMP compliance and data integrity should be provided for all employees to prevent similar issues in the future. ➡️ Revise the Response Plan: The company's action plan should be revised to include more immediate corrective actions and an expedited timeline for resolving the issues. ➡️ Investigate All Involved Parties: The company must conduct a complete investigation, including interviewing current and former employees, to fully understand the scope of the violations. Contact us www.pharmacgi.com for compliance and remediation support.