Understanding PIPA: What Illinois Businesses Need to Know

Why PIPA Matters to Your Business?

Constant digital threats and data breaches can devastate reputations overnight. The need to protect sensitive information is not just good practice—it’s the law. For Illinois businesses, the Personal Information Protection Act (PIPA) sets the standard for how personal data must be handled, protected, and, when necessary, disclosed after a breach. In this article, we break down what PIPA requires and how your organization can meet those obligations.

What Is PIPA?

The Personal Information Protection Act (815 ILCS 530/) is an Illinois law that governs how businesses, government agencies, and other entities manage personal data. It focuses on:

• Notifying individuals after a data breach
• Protecting stored personal data
• Safely disposing of sensitive information
• Ensuring third-party vendors uphold strong data protection standards

Failure to comply with PIPA can result in significant legal exposure, public reporting of your breach, and penalties under the Illinois Consumer Fraud and Deceptive Business Practices Act.

What Counts as Personal Information?

Under PIPA, “personal information” means more than just a name. If an Illinois resident’s name (first + last or first initial + last name) is combined with any of the following unencrypted or unredacted data, it qualifies:

• Social Security Number
• Driver’s license or State ID number
• Credit/debit card or financial account info with access credentials
• Medical or health insurance information
• Biometric data (fingerprints, iris scans, etc.)
• Username/email + password or security questions

Even information compromised in a phishing attack or data mistakenly sent to the wrong recipient may fall under PIPA’s definition.

Your Responsibilities Under PIPA

1. Breach Notification

If your organization experiences a breach that compromises personal information:

• You must notify affected Illinois residents without unreasonable delay.
• You must inform the Illinois Attorney General if more than 500 residents are affected.
• You must provide information about fraud protection resources.

If law enforcement determines that disclosure could hinder an investigation, you may delay notification temporarily.

2. Vendor Compliance

If you share personal data with third-party vendors (e.g., cloud storage, payroll processors, IT support), those vendors must:

• Maintain reasonable security measures.
• Notify you immediately if they experience a breach.

Contracts should clearly define these responsibilities.

3. Secure Storage and Disposal

Businesses must:

• Implement reasonable security practices (firewalls, access controls, encryption, etc.).
• Permanently destroy unneeded personal information in a way that renders it unreadable or irretrievable (e.g., shredding, data wiping).

This applies to both digital and physical formats.

What Does “Reasonable Security” Mean?

PIPA does not define a universal security standard, but courts and regulators expect businesses to:

• Limit data access to authorized users only
• Use strong passwords and multi-factor authentication
• Encrypt sensitive data at rest and in transit
• Conduct regular software updates and vulnerability scanning
• Monitoring for suspicious activity
• Train employees in data security best practices

Businesses subject to HIPAA, the Gramm-Leach-Bliley Act, or similar federal laws are considered compliant with PIPA if they meet those standards.

Risks of Non-Compliance

Ignoring PIPA obligations can result in:

• Civil penalties under the Consumer Fraud and Deceptive Business Practices Act
• Attorney General investigations and public disclosures
• Damage to your brand and customer trust

In the digital age, even small breaches can make headlines and erode years of credibility. The time to act is before an incident occurs.

How Reintivity Helps

Reintivity, a Managed IT Services and Consulting firm, specializes in helping Illinois businesses of all sizes:

• Conduct data privacy assessments to identify risks
• Implement custom security measures aligned with PIPA
• Draft or review incident response and breach notification plans
• Provide staff training on data protection
• Manage third-party vendor compliance
• Establish secure data retention and destruction policies

Whether you’re looking to strengthen your current infrastructure or start building from scratch, our team provides tailored solutions that meet your business needs and budget.

Compliance Is Protection

PIPA isn’t just about checking boxes—it’s about safeguarding your business, your customers, and your future. With regulations tightening and threats rising, now is the time to make data privacy a core part of your operations.

Don’t leave your data privacy strategy to chance. Contact us today for a free consultation on how to prepare your technology, policies, and systems to meet Illinois PIPA requirements.