By Jerri-Lynn Scofield, who has worked as a securities lawyer and a derivatives trader. She is currently writing a book about textile artisans.
As the Trump administration seeks to upend the influence California has in setting national fuel emissions policy for the auto industry, the new California Consumer Privacy Act (CCPA is scheduled to come into effect on 1st January.
Businesses are racing to comply (see Trump Seeks to Revoke California Emissions Waiver; see also Trump challenges California’s power to regulate vehicle emissions, for Trump efforts subsequent to my post, which I may write up at some future date).
The state passed the CCPA in July 2018, the first legislation of its kind in the US. In the absence of any federal initiative, this bellwether may become the de facto model or even floor for other state efforts, just as has occurred in the area of auto emissions.
The CCPA forestalled a more expansive ballot initiative, which was pending at the time of passage (see California Passes Online Privacy Law). More than 500,000 businesses meet the criteria that makes them subject to its terms, not all of them based in California.
The Wall Street Journal reported Sunday in Businesses Across the Board Scramble to Comply With California Data-Privacy Law:
Starting next year, all California residents will have the right to ask retailers, restaurants, airlines, banks and many other companies to provide them with any personal information they may have, including individual contact information, purchases and loyalty-program history. Consumers also can ask that businesses delete their information, or opt out of letting it be sold.
But the law, which passed last year and goes into effect Jan. 1, applies to any for-profit business that does business in California and collects data on California residents, as long as its annual revenue tops $25 million, or it holds personal information on at least 50,000 consumers, or it generates at least 50% of its annual revenue from selling user data. Even companies with no physical presence in California but a website that serves Californians are preparing to comply.
Even though the California law was passed last summer, many companies adopted a wait-and-see attitude during the amendment and rule-making process and failed to take timely steps to ensure their compliance by January 2020. In fact, in a survey PricewaterhouseCoopers conducted last year, only 52% of respondents said they expected their company to be compliant by the legislation’s effective date, as reported by the WSJ.
Forbes fleshed out what the CCPS will do, in A New California Privacy Law Could Affect Every U.S. Business—Will You Be Ready?:
The CCPA will enable individuals to take a more active role in monitoring and protecting their personal information. Although the regulation consists of complex data safeguards, consumer rights can be grouped into five high-level categories:
- Businesses must inform consumers of their intent to collect personal information.
- Consumers have the right to know what personal information a company has collected, where the data came from, how it will be used, and with whom it’s shared.
- Consumers have the right to prevent businesses from selling their personal information to third parties.
- Consumers can request businesses to remove the personal information that the business has on them.
- Businesses are prohibited from charging consumers different prices or refusing service, even if the consumer exercised their privacy rights.
California Standard Compared to EU Regulation
What will the CCPA, compared to the standard set up the EU’s General Data Protection Regulation?
As Roll Call reports, California sees push on data privacy:
The California law in some cases is tougher than the European Union’s General Data Protection Regulation, or GDPR, that went into force last year.
The GDPR and California privacy laws offer affirmative rights to consumers with respect to data being collected on them by online companies…
While GDPR considers personal information as anything that is directly or indirectly identified or identifiable with an individual, the California law goes further, covering not only an individual but also data belonging to a household.
The CCPA also includes under “personal information” inferences that can be drawn from disparate data sets using artificial intelligence algorithms.
CCPA defines personal information as “information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household.”
Hail Mary Passes: Last-Minute Amendments
Considerable lobbying activity is still underway to amend aspects of the law before California’s legislative session for this year closes at the end of the week.
As Roll Call reports:
Retailers, online advertisers, small businesses and groups representing employers are all seeking either exemptions or amendments to the California Consumer Privacy Act, or CCPA, which has set the stage for a national debate on how companies should safeguard users’ personal information online.
The state’s constitution requires that all amendments and bills for the legislature’s consideration be filed and printed 72 hours before the end of the session, making Monday the deadline for proposing changes to the law. The assembly ends its session for the year on Friday.
The International Association of Privacy Professionals is following the progress of all proposed changes and reports 10 amendments are still in play, while 8 are moribund, according to Roll Call. Two are worth examining further here.
First, according to Roll Call:
Of the several changes sought by companies in California, one of the main ones that has gained traction is an amendment that would grant a one-year exemption for companies collecting data on employees and job applicants from being considered “consumers” under the law. The amendment has cleared the state’s Senate Judiciary Committee and now awaits passage in the full upper chamber before being approved by the assembly and heading to the governor’s desk.
Under the expansive definition of personal information in the law, several scenarios that have nothing to do with consumers could be affected, including data collected by employers on employees, [Sarah Boot, policy advocate on privacy issues at the California Chamber of Commerce] said.
Left unaddressed, the law would have covered all employee emails, internal discussions on projects, and potentially employees’ internet search history on a company’s computers, Boot said. Without the amendment, the law would also have allowed employees to demand that employers delete all their emails, potentially destroying any evidence in cases involving sexual harassment and other workplace misbehavior, she said.
The amendment would allow employee data to be exempt from the law for one year, while companies and labor unions work to come up with a compromise on what data can be collected by employers and how it should be stored and used, Boot said.
And a second significant issue still in play: customer loyalty programs:
Another proposed change that is unlikely to survive is a push by retailers and advertisers to exempt customer loyalty programs from the law’s provisions. Companies tried to argue that consumers would stand to lose if a grocery chain is not allowed to share customer details with say a gas station chain or similar arrangements among airlines, hotels and car rental companies.
Nevertheless, retailers and lobbyists are pushing to exclude loyalty programs from CCPA’s purview, said Dan Jaffe, executive vice president at the Association of National Advertisers. “A vast number of American consumers are part of loyalty programs and if the California law disallows companies from selling any consumer data it would undermine all loyalty programs,” he said.
Will these efforts to restrict the range of the statute prevail? I cannot hazard a guess. Yet whether or not they do, the overall CCPA framework will go into effect in 2020, thus according at least some in the United States levels of digital privacy protection (somewhat) comparable to those offered to EU residents.