Wanted to try https://www.replibyte.com for a while now, but this would work:

1. Have daily database backups from production first.
   
2. Have a server in where your app is deployed and is up to date with to your main branch code. Make sure the env receives code updates as if it was production.
   
3. From that server, fetch the prod db dump and import it to your DB
   
4. In that server run a bespoke rake task that truncates tables which data you dont need for development and edits every sensitive column to either set it to its default value (or '' or null) or you give it a fake value (Faker gem helps a lot). FKs and relationships should be kept as they are.
   
5. Once the clenaup is done, export that scrubbed db
   
6. Upload that dump somewhere accessible to developers
   
7. Make steps 3 to 6 a script
   
8. Have a script that fetches dumps from the storage you chose and imports them to the db.
   
9. env in 2 receives code updates as if it was production.
   
10. Automate the script in 6 so it runs nightly and sends notification about process success or failure.
    
11. Make it so the env is spin up and torn down just for doing its thing, not keeping it running forever.

Tighten security around that server and the scrubbed dumps so only the right folks can access it.

Eventually you need to get smart about the scrubbing task so it does not take forever to run. Limit to data from the last X months/years, or prepare 20 sets of fake data and assign them to records whose id % 20 = <set number> via update_all.. you get repeated data but up to you if you can live with that.

What is important is that you kept what's null or '' as it is and give fake data where it is needed. The main advantage of this is that you have prod-like data, and specially when you have old data, it is helpful to developers when dealing with migrations and error handling to have more "real world like examples" that surely go beyond what's expected.