SaaS Compliance Is Broken — and the Risk Is Bigger Than You Think

Martin Snyder
Jun 26
3 min read

Updated: Jun 26

GDPR. CCPA. PCI DSS. These frameworks aren’t just regulatory acronyms — they’re the foundation of customer trust, brand integrity, and legal accountability. But here’s the uncomfortable truth: your organization's compliance is only as strong as the weakest SaaS application your employees are using.

And that’s where the real danger begins.

Shadow SaaS Is Undermining Your Compliance

Every day, employees introduce new SaaS applications — often without realizing the security or compliance implications. A designer tests out an AI tool. Sales experiments with a niche CRM. HR tries a new recruiting platform. None of these tools go through formal vetting, yet many process sensitive customer or employee data.

The issue? Most SaaS providers aren’t compliant:

Many store data in non-compliant regions
Some lack encryption, MFA, and access logs
Others have no public compliance documentation at all

Your compliance posture is being silently eroded by third-party vendors you never approved.

It’s Not Just an IT Problem — It’s a Business Risk

Compliance is often treated as an IT or security team responsibility. But every department is adopting SaaS — HR, marketing, finance, sales — and they’re not waiting for approval. That creates organizational exposure.

And regulators don’t care whether it was shadow IT or not:

GDPR fines can reach €20 million or 4% of global annual revenue
CCPA violations cost $2,500–$7,500 per record
PCI DSS non-compliance can lead to monthly fines up to $100,000

If your SaaS tools touch sensitive data — PII, payment info, health records — they must meet compliance standards. No exceptions.

You Can’t Secure What You Don’t See

The average enterprise uses over 1,000 SaaS applications, but only a small percentage are officially approved or monitored. That means most organizations are flying blind when it comes to SaaS risk.

To fix this, you need to:

Discover All SaaS Usage

Start with SaaS discovery. Tools like Waldo Security's Free SaaS Discovery Tool identify apps connected to your environment via OAuth, browser extensions, or API keys.

Classify and Vet for Compliance

Flag apps that don’t support SOC 2, ISO 27001, GDPR, HIPAA, or other required frameworks. If a vendor can't prove compliance, it shouldn't process sensitive data.

Implement Guardrails

Use SaaS security platforms to block risky apps, enforce SSO/MFA, and automate identity offboarding. Educate employees about the importance of data protection.

Continuously Monitor

Compliance is not a one-time checkbox. SaaS apps change frequently. Ongoing monitoring of your stack is essential.

The Harsh Reality: Most SaaS Isn’t Built with Compliance in Mind

While some enterprise SaaS vendors prioritize security, many early-stage and niche tools do not. They lack the time, budget, or expertise to align with frameworks like GDPR or CCPA.

But that doesn’t absolve you of responsibility. Regulatory frameworks hold your organization accountable — and that includes third-party vendors handling your data.

If you’re regulated, so are your SaaS vendors.

This is where tools like Waldo Security’s SaaS Compliance Scanner come in. They help identify non-compliant apps before they become legal liabilities.

How to Take Back Control

Here’s your action plan:

Discover all apps in your SaaS stack — including shadow IT
Map every app against compliance frameworks (SOC 2, GDPR, PCI, HIPAA, etc.)
Block high-risk tools and enforce SSO, MFA, and proper access control
Continuously review, monitor, and rotate access
Use tools like Waldo to automate visibility and enforcement

Final Thoughts

SaaS compliance gaps are real — and growing. The average employee isn’t thinking about GDPR when they connect a tool. But regulators, threat actors, and customers certainly are.

Start with visibility. Then enforce standards. Waldo Security is here to help.

Schedule a free SaaS compliance audit and find out where your blind spots are.

External References: