How Texas Businesses Must Comply with the Texas Data Privacy and Security Act (TDPSA): Costs & Exemptions

In the modern digital economy, protecting consumer information is critical. The Tex. Bus. & Com. Code § 541.001 et seq. (TDPSA) introduces new operational rules for companies operating within the state. Whether your business is headquartered in Dallas, Austin, or Houston, or you simply target Texas consumers online, understanding these compliance requirements is essential to avoid severe penalties. If you are unsure how these laws affect your operations, browsing our US Lawyers Directory to hire a local business lawyer is a wise step to ensure your policies are up to code.

Step-by-Step TDPSA Compliance in Texas

Compliance depends heavily on your specific business model. However, any entity processing large amounts of data must be prepared to answer consumer requests and conduct internal audits.

Step 1: SaaS Companies and Data Assessments

Software-as-a-Service (SaaS) companies often process vast amounts of user data. Under Tex. Bus. & Com. Code § 541.101, companies that control or process personal data must limit their collection to what is adequate, relevant, and reasonably necessary. In addition, under Tex. Bus. & Com. Code § 541.105, SaaS platforms must conduct Data Protection Assessments before engaging in activities like targeted advertising or selling personal data. This documentation must be made available to the Office of the Attorney General, Austin upon request.

Step 2: E-commerce Platforms and Consumer Rights

Online retailers operating in Texas must provide clear methods for consumers to exercise their data rights. According to Tex. Bus. & Com. Code § 541.051, Texas residents have the right to access, correct, delete, and obtain a copy of their personal data. E-commerce sites must update their privacy policies to explain these rights and offer a secure process to submit data requests, usually within a 45-day response window.

Step 3: Healthcare Handling Non-HIPAA Data

While the TDPSA exempts entities completely governed by HIPAA, many modern health apps and wellness platforms collect biometric or health data without falling under HIPAA regulations. If your health tech company operates in San Antonio or elsewhere in the state, you must obtain affirmative consent before processing this sensitive personal data, as defined by the TDPSA.

Step 4: Retailers and Targeted Advertising

Brick-and-mortar retailers in cities like Fort Worth who run digital loyalty programs or engage in targeted advertising must also comply. You must provide a clear mechanism for consumers to opt out of the sale of personal data or targeted advertising. Implementing universal opt-out signals, such as the Global Privacy Control, is becoming a recognized standard for achieving compliance.

Step 5: Small Business Exemptions and Consents

Unlike some other states, Texas bases its small business exemption directly on the United States Small Business Administration (SBA) guidelines. If your company qualifies as a small business under these federal metrics, you are broadly exempt from the heavy operational requirements of the TDPSA. However, under Tex. Bus. & Com. Code § 541.107, you are not exempt from the rule requiring prior consumer consent before selling sensitive personal data.

How Much Does it Cost in Texas?

Failure to comply with the TDPSA can result in hefty enforcement actions. The Office of the Attorney General, Dallas or other regional branches can seek significant civil penalties.

How Long Does the Process Take?

For a business to become fully compliant with the TDPSA, the operational overhaul usually takes between 3 to 6 months. This involves auditing data flows, updating public-facing privacy policies, and implementing internal mechanisms to handle consumer requests. Once a consumer submits a data request (like asking to delete their data), Texas law requires the business to respond without undue delay, and no later than 45 days of receipt.

Frequently Asked Questions (FAQ)