Data Privacy in Virtual Data Rooms: Best Practices

Data privacy is a major concern for both consumers and organizations. As new regulations are continually introduced to address how data is collected, stored, and used, companies must stay vigilant in protecting their sensitive information. Virtual data rooms (VDRs) have emerged as a secure solution for file storage, sharing, and collaboration, but proper practices are essential to maximize their benefits.

This guide outlines key best practices for enhancing data privacy in virtual data rooms.

Why VDR Data Privacy Matters

For businesses of all sizes, safeguarding data is critical to avoiding legal, financial, and reputational damage. Focusing on data privacy achieves three key objectives:

1. Regulatory Compliance

Various industries are subject to strict data protection laws, such as the California Consumer Privacy Act (CCPA), the Health Insurance Portability and Accountability Act (HIPAA), and the EU’s General Data Protection Regulation (GDPR). Compliance with these regulations is crucial, as failure can lead to severe penalties, ranging from hefty fines to potential criminal charges.

2. Risk Mitigation

Cybersecurity threats are a growing concern, and the cost of a data breach continues to rise. According to Statista, the average cost of a data breach in the U.S. reached $9.36 million in 2024. Strengthening your data privacy measures can help shield your business from these risks.

3. Trust Building

With data breaches becoming more common, consumers are losing trust in companies that fail to protect their information. According to the International Association of Privacy Professionals, over 80% of consumers would consider ending their relationship with a business following a data breach. Taking proactive steps to ensure data security can build trust and strengthen relationships with stakeholders.

6 Best Practices for VDR Data Privacy

By following these best practices, organizations can improve data privacy when using virtual data rooms.

1. Configuring Digital Rights Management (DRM)

Digital rights management (DRM) is a key feature in VDRs that allows administrators to control access to documents. With DRM, you can determine who has the ability to view, edit, download, or print specific documents. It’s also possible to revoke access if necessary, even after a document has been downloaded.

To enhance data security, document owners should:

• Regularly revoke access for users who no longer need it
• Avoid misconfigurations in DRM settings
• Verify permissions to ensure documents are secure

Some VDRs even allow you to set expiration dates for document access, adding another layer of security.

2. Conducting Regular Internal Security Audits

Security audits should be performed regularly to ensure data is stored and handled in compliance with internal policies and regulations. Executives should implement policies governing data storage within VDRs and appoint admins to conduct audits at regular intervals.

VDR platforms help facilitate audits by maintaining detailed, timestamped records of document activity.

3. Establishing Document Organization Protocols

An effective document organization strategy is essential for maintaining data privacy. Administrative teams should create structured file systems that support data segregation and document labeling, making it easier to manage sensitive information.

Many VDRs offer customizable file structures to meet the unique needs of different industries and organizations.

4. Providing Ongoing User Training

Ongoing training ensures employees understand how to use VDRs securely. Training should cover:

• Secure file sharing methods
• Document permission management
• Password creation best practices
• Folder and document labeling
• Setting expiration dates for links
• Watermarking documents
• Tracking document activity

Integrating VDR training into employee onboarding and offering continued education can enhance security, even as technology evolves.

5. Monitoring User Activity

VDRs provide real-time tracking of document activity, allowing admins to see who has viewed or downloaded files. Monitoring these logs regularly helps detect any suspicious behavior. If a user no longer needs access, their permissions should be immediately revoked.

6. Carefully Selecting Your VDR Provider

Choosing the right VDR provider is crucial for ensuring data privacy. Look for providers that offer advanced security features, such as encryption, multi-factor authentication, and compliance with relevant regulations. Take the time to review each provider’s offerings to ensure their solutions meet your business’s security needs.

High-Security Virtual Data Room Provider

CapLinked provides a highly secure virtual data room solution, designed to protect sensitive information and meet stringent international security standards. Notable features include:

• Military-Grade 256-bit Advanced Encryption
• Secured HTTPS Connections
• Premium SSL/TLS Protocols
• EU-US Privacy Shield and AICPA SOC 2 Certifications
• Compliance with HIPAA, ISO 27001, and PCI SAQ-D
• Comprehensive Digital Rights Management
• Real-Time Virus Protection
• Multi-layered Security Firewalls

CapLinked’s virtual data rooms offer enterprise-level security to ensure your data remains protected at all times.

By following these best practices and selecting a trusted VDR provider, your organization can strengthen its data privacy efforts, minimizing risks and building trust with stakeholders.