It’s a great time to be a privacy attorney. On October 17, 2022, the California Privacy Protection Agency (CPPA) released the next draft of the regulations under the California Privacy Rights Act of 2020 (CPRA) as well as a document explaining the proposed modifications. Two days of public hearings were recently held on October 21-22
CCPA Is Here – Is Your Security “Reasonable”?
Under the California Consumer Privacy Act, any California consumer whose personal information is compromised “as a result of the business’ violation of the duty to implement and maintain reasonable security procedures and practices … may institute a civil action.”[1]
Consumers can initiate this private right of action right now, whereas other consumer rights can only be enforced by the Attorney General beginning in July.[2]
Why This Matters
Most civil actions filed against companies during the last decade were dismissed. Why? Consumers were unable to demonstrate a suitable harm. Sure, cybersecurity incidents are a hassle for consumers to deal with, but that alone was not enough. Recently, however, courts have said “the hassle” is enough, at least for cases to proceed past their initial stages. This has led to a steady rise in both the number of cases that are settled and their dollar amounts.
Complicating things further, under the CCPA proving harm doesn’t necessarily matter. If personal information is compromised because of a failure to implement and maintain reasonable security, the CCPA quantifies harm to be “not less than one hundred dollars ($100) and not greater than seven hundred and fifty ($750) per consumer per incident” or an amount higher if proven.[3] What matters is whether your security is reasonable.
Google’s search engine defines reasonable as “as much is appropriate or fair.” For those who reminisce about how they spent three years in law school learning the many ways “reasonable” can be interpreted, the CCPA may trigger déjà vu; neither the CCPA nor its proposed regulations defines “reasonable security.” But reliable guidance is available.
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CCPA is Here – Are Your Agreements Ready?
On January 1, 2020, if your company sells goods or services to California consumers and meets certain criteria,[1] the agreements you have with companies that handle personal information on your behalf should be analyzed and, if necessary, updated just as your privacy notices should be updated.[2]
Examples of companies that handle personal information on a company’s behalf include marketing companies, managed security service providers (MSSP), and software-as-a-service (SaaS) providers such as payment processing, document and email management, and customer analytics companies.
Why this Matters
Under the California Consumer Privacy Act (“CCPA”), companies that handle consumer information on behalf of a company are “service providers.”[3] The CCPA requires that a company enter into an agreement with a service provider that
prohibits the entity receiving the information from retaining, using, or disclosing the personal information for any purpose other than for the specific purpose of performing the services specified in the contract for the business … [4]
This is important because the CCPA exempts a company for any violation of the CCPA if its service providers have executed an agreement and they, not the company providing the personal information, violates any of the rights given to California consumers under the CCPA.[5]
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CCPA is Here – Is Your Privacy Notice Ready?
Last year towards the end of May, a barrage of emails and pop-ups informed online users about how companies use cookies – small bits of software that track website activity – in accordance with a requirement under the European Union’s General Data Protection Regulation.
On January 1, 2020, many companies will inform consumers about updates to their privacy notices – agreements between companies and their consumers about how personal information is processed – in accordance with a requirement under the California Consumer Privacy Act (“CCPA”).
Why this Matters
A privacy notice (aka privacy policy or privacy statement) is typically the first place a company explains its practices for handling the personal information it collects. Privacy notices have received considerable attention this year, not all of it positive. You do not have to read all of the New York Times article, “We Read 150 Privacy Policies. They Were an Incomprehensible Disaster,” to know what it concluded.[1] Similarly, an article titled “Are Organizations Ready for New Privacy Regulations?” summarizes the Online Trust Alliance’s analysis of 1,200 privacy statements and its view that many of these privacy notices could result in penalties for failing to follow new laws such as the CCPA.[2] In addition, privacy notices have been the subject of litigation in cases asserting that the sale of customer information to non-affiliated entities for marketing purposes,[3] and the transfer of customer data in a merger, asset sale, or sale of customer information, were all improper because they violated companies’ privacy notices.[4]
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CCPA is Coming – Is Your Business Prepared For The Data Requests & Lawsuits?
Does your business collect personal information from residents in California? Does it monitor user activity on its website? If so, there is a good chance it will need to comply with the California Consumer Privacy Act (“CCPA”), which takes effect January 1, 2020.
Following the European Union’s implementation of GDPR, California adopted the CCPA, which