As of January 1, 2020, the California Consumer Privacy Act (CCPA) is in effect and impacts numerous businesses that collect or process the personal information of California residents. The CCPA carries potentially stiff penalties for noncompliance, but the actual text of the law does not provide a clear roadmap for companies to feel comfortable that they are doing things the right way. As such, we are already seeing dramatic disparities in how companies across the world are interpreting the CCPA and choosing to implement its requirements. They can’t all be right.
The California Attorney General recently published a report assessing CCPA compliance costs. The report attempts to quantify the monetary value of consumers’ personal data, and estimates the total value of personal data exceeds $20 billion annually. The report goes on to estimate the total cost of initial compliance at $55 billion for all companies subject to the CCPA. The report assumes that initial compliance costs will constitute the “vast majority,” of compliance costs. Anecdotally, however, this assumption may need to be reconsidered in light of the anticipated recurring expenses that companies eventually will be required to incur in order to respond to data subject access requests.
On October 11, 2019, the California Attorney General (the “California AG”) issued draft regulations (the “Draft Regulations”) pursuant to his authority under the California Consumer Privacy Act of 2018 (“CCPA”).1 The publication of the Draft Regulations commences the public comment period during which numerous interpretative issues relating to the implementation of the CCPA hopefully will be addressed and resolved.Unfortunately, the California AG chose to limit the Draft Regulations to basic process issues relating to the overall structure of the CCPA, and elected not to address many of the more difficult compliance problems identified by industry participants. More troubling is the inclusion of additional procedural steps that a covered “business”2 must follow when complying with “requests” for “personal information”3 (“PI”). (If ultimately adopted, several of these additional compliance obligations could likely create technical and unintended violations of the CCPA.)4This Alert provides an initial analysis of the approach taken by the Draft Regulations, as well as suggestions for participating in the rule-making process.5
By: Divya Gupta, Dorsey & Whitney Partner and Coy Wamsley, Dorsey & Whitney Associate
With the California Consumer Privacy Act (“CCPA”) set to take effect on January 1, 2020, and the resulting looming specter of statutory damages and data breach class action litigation for failure to implement “reasonable security” on the near horizon, reducing or mitigating the harms that result from such cyber-attacks is more important than ever. Since 2015, more than three in five Californians have been a victim of a data breach, making implementation of reasonable security controls now a critical and necessary component of CCPA compliance.1 While the retail industry has had record breaking breaches from malware and hacking, especially with card data, no industry is risk free when it comes to adequate data security.
Managing or mitigating risk, however, requires implementing “reasonable security,” which derives from the Center for Internet Security’s Top 20 Critical Security Controls (CSC 20) per then California Attorney General in 2016, Kamala Harris. In California’s 2016 Data Breach Report, Harris stated that “[The CSC 20] are the priority actions that should be taken as the starting point of a comprehensive program to provide reasonable security.”
Just as companies are reaching the straightway in their efforts to get ready to comply with the California Consumer Privacy Act (“CCPA”) by January 1, Nevada has burst ahead with a privacy law that will take effect before the CCPA. On May 29, 2019, Nevada Governor Steve Sisolak signed SB 220 into law, amending Nevada’s existing law that requires an operator of an Internet website or online service to provide a privacy notice to consumers detailing certain of the operator’s privacy practices; SB 220 goes into effect on October 1, 2019.1 SB 220 allows consumers to opt-out of operators of Internet websites and online services selling personally identifiable information to other entities for monetary consideration and will require both legal and operational changes for businesses. Operators, as defined by the law, must create a “designated request address” that allows consumers to submit requests prohibiting sale of information collected about the consumer, and operators must respond to the requests within 60 days.
Since its adoption last year, U.S. financial institutions have been confronted with the challenge of planning their compliance with the California Consumer Privacy Act (the “CCPA”)1. The CCPA becomes effective in two stages—January 1, 2020 and July 1, 2020 (or possibly sooner depending upon the date the California Attorney General adopts implementing regulations).2Regrettably, considerable confusion exists within the financial industry about the scope of the CCPA and the obligations it imposes on financial institutions.In an effort to provide our financial intermediary clients and friends with a workable summary of a financial institution’s obligations—and in particular for financial institutions that do not have a physical presence in California—this Alert is intended to assist in identifying coverage considerations, and provide a practical approach to the development of a project plan that will demonstrate reasonable compliance with the CCPA’s admittedly ambiguous set of requirements and obligations.
On Thursday, March 16, 2019, the California Senate Appropriations Committee held in Committee SB 561, which would have greatly expanded the private right of action (i.e., the ability to bring private class actions) available under the California Consumer Privacy Act (“CCPA”). SB 561 was introduced in February by California Attorney General (“AG”) Xavier Becerra and Senator Hannah-Beth Jackson. Notably, the bill sought to amend the existing private right of action to cover all violations of the CCPA, as opposed to merely data breaches. Additionally, the bill would have discontinued the 30-day cure period, whereby businesses were immunized from penalization by the AG to the extent they were able to cure an alleged violation within 30-days’ notice thereof, and would have eliminated businesses’ and third parties’ entitlement to seek interpretive guidance regarding compliance from the AG (and instead would authorize the AG to publish general guidance).
As companies were getting up-to-speed on the effects of the European Union’s General Data Protection Regulation (GDPR) last year, California quickly enacted its own privacy law, the California Consumer Privacy Act (“CCPA” or “Act”) last June. We address below the high risk associated with the CCPA and its interaction with regulations in key U.S. industries. The fast-passed legislation was designed to avoid a November 2018 ballot initiative on the subject, and was plagued by errors and ambiguities that require robust clarification. The Act’s take-away, however, was abundantly clear – California consumers have a right to know what personal data companies are collecting and are empowered to bring a private right of action for a data breach (and even potentially for other violations of the Act).
Although numerous attempts have been made to pass a comprehensive U.S. privacy law over the years, this one might actually succeed. Efforts have begun on multiple fronts. From Senate Commerce Committee hearings to several federal agencies vying for which will lead a federal regulatory effort, privacy is a hot topic in Washington, DC. Businesses should take immediate action to enter the discussions if they have not already done so. Comments on a proposed federal framework are due October 26, 2018. The Commerce Committee will hold additional hearings in October. Industry is coming to the table in an attempt to avoid facing a jumble of inconsistent state privacy laws.
By: Joseph Lynyak, Robert Cattanach, and Sam Bolstad 1. Introduction On June 28, 2018, the California Legislature unanimously passed, and the Governor immediately signed, a sweeping expansion of data privacy protections for residents of California.1 Assembly Bill No. 375, entitled the “California Consumer Privacy Act of 2018” (the “CCPA”), goes far beyond current U.S. privacy protections,… Read More