Organizations can’t afford to be non-compliant
Non-compliance can cost organizations 2.71 times more than maintaining compliance programs, according to Secureframe. That’s because non-compliance can result in business disruption, productivity losses, fines, penalties, and settlement costs, among other factors that come with a hefty price tag. Even data breaches are more expensive if an organization is non-compliant.
In recent years, organizations across various sectors have faced significant fines for non-compliance with regulations such as HIPAA, GDPR, and CCPA.
The high cost of regulatory non-compliance
Regulatory non-compliance can result in financial penalties ranging from thousands to millions of dollars.
European regulators imposed €4.48 billion in fines across 2,086 cases, mainly targeting insufficient legal grounds for data processing and inadequate security measures. Companies lacking comprehensive data governance frameworks were hit hardest. For example, the GDPR can impose fines of up to 4% of a company’s annual global revenue for violations. This was the case for Meta, which was fined €1.2 billion in 2023 for having an insufficient legal basis for data processing. This remains the largest GDPR fine to date.
Regulatory bodies may take legal action, leading to lawsuits or criminal charges. For instance, companies that commit financial fraud under SOX may face criminal prosecution, and executives can be personally held liable.
In June 2024, the Securities and Exchange Commission (SEC) issued more than $500,000 in SOX penalties and fines to the former chief financial officer at Synchronoss Technologies for allegedly falsifying financial statements and lying to the company’s auditor. This came after Synchronoss reached a $12.5 million settlement with the SEC for engaging in “long-running accounting improprieties” in June 2022.
Contracts and funding depend on regulatory compliance
Businesses may face restrictions, such as losing the ability to process transactions or operate in certain markets. For example, a payment processor found in violation of PCI DSS requirements may be prohibited from handling credit card transactions, impacting revenue and customer trust.
Organizations that fail to comply with government regulations may lose contracts or funding opportunities.
For example, in February 2025, the military health benefits administrator Health Net Federal Services (HNFS) agreed to pay $11.2 million to settle allegations that the company falsely certified compliance with cybersecurity requirements for three years in a contract with the U.S. Department of Defense to administer the TRICARE program. In addition to paying that fine, they also lost their TRICARE West Region contract.
Many businesses require their partners and vendors to maintain strict compliance standards, and these often go beyond regulatory requirements to include commercial frameworks like SOC 2. Enterprises that have strong security and privacy standards may refuse to work with vendors who fail to meet those standards, resulting in lost revenue and missed growth opportunities.
HIPAA penalties linked to data protection failures
According to the US Department of Health and Human Services’ (HHS) Enforcement Highlights, they have received nearly 375,000 complaints since the compliance date of the Privacy Rule in April 2003. Analysis of $144.9 million in HIPAA fines reveals that inadequate safeguards for electronic protected health information (ePHI) were the primary cause.
Multiple breaches exposing sensitive patient data, such as Montefiore Medical Center’s $4.75 million settlement, resulted in the largest penalties.
California’s increasing focus on privacy led to substantial fines for companies that failed to provide required consumer opt-out mechanisms or mishandled data access requests. This signals a trend toward stricter enforcement in the future.
In March 2025, the California Privacy Protection Agency fined Honda $632,500 for making it unnecessarily difficult for consumers to exercise their privacy rights, such as opting out of data sharing.
“Our research confirms what forward-thinking security leaders already know – reactive compliance approaches are exponentially more expensive than proactive programs,” said Shrav Mehta, CEO of Secureframe. “Organizations that leverage automation and expertise to build continuous compliance into their operations don’t just avoid penalties – they create competitive advantages through stronger security postures and enhanced customer trust.”