California Consumer Privacy Act Amendment Signed Into Law

On September 23, 2018, Governor Jerry Brown signed into law SB-1121 amending certain provisions of the California Consumer Privacy Act of 2018 (CCPA) which was enacted in June of this year. As we reported previously, CCPA will apply to any entity that does business in the State of California and satisfies one or more of the following: (i) annual gross revenue in excess of $25 million, (ii) alone or in combination, annually buys, receives for the business’ commercial purposes, sells, or shares for commercial purposes, alone or in combination, the personal information of 50,000 or more consumers, households, or devices, or (iii) derives 50 percent or more of its annual revenues from selling consumers’ personal information. Under CCPA, key consumer rights will include:

• A consumer’s right to request deletion of personal information which would require the business to delete information upon receipt of a verified request;
• A consumer’s right to request that a business that sells the consumer’s personal information, or discloses it for a business purpose, disclose the categories of information that it collects and categories of information and the identity of any 3rd parties to which the information was sold or disclosed;
• A consumer’s right to opt-out of the sale of personal information by a business prohibiting the business from discriminating against the consumer for exercising this right, including a prohibition on charging the consumer who opts-out a different price or providing the consumer a different quality of goods or services, except if the difference is reasonably related to value provided by the consumer’s data.

SB-1121’s amendments include:

• A clarification to the definition of personal information: The data elements listed in the definition are personal information, not automatically, but to the extent that they identify, relate to, describe, are capable of being associated with, or could be reasonably linked, directly or indirectly, with a particular consumer or household.
• An expansion of exempt information to include protected health information collected by a business associate governed by HIPAA/HITECH.
• A clarification that personal information collected, processed, sold, or disclosed pursuant to the Gramm-Leach-Bliley Act, the California Financial Information Privacy Act, or the Driver’s Privacy Protection Act of 1994 is exempt regardless of whether the CCPA conflicts with these laws.
• An exemption for information collected as part of a clinical trial subject to the Common Rule.
• A clarification that information collected pursuant to the Gramm-Leach-Bliley Act and the Driver’s Privacy Protection Act of 1994 will not be exempt from a consumer’s cause of action relating to certain data breaches.
• A clarification that a private cause of action exists only for data breaches and only if prior to initiating any action for statutory damages, a consumer provides a business 30 days written notice and opportunity to cure any violation. Notice is not required in an action solely for pecuniary damages.
• Removal of a requirement for a consumer to provide notice of a private cause of action to the Attorney General.
• Incorporation of a provision that businesses, service providers, or persons who violate the CCPA and fail to cure such violation within 30 days of written notice shall be liable – in an action brought by the state Attorney General – for a civil penalty of not more than $2,500 for each violation or $7,500 for each intentional violation.
• An extension of the time for the Attorney General to adopt regulations from January 1, 2020 to July 1, 2020.
• A provision that the Attorney General shall not bring an enforcement action under CCPA until 6 months after publication of the final implementation regulations or July 1, 2020, whichever is sooner.

With an effective date of January 1, 2020 (and regulations not yet proposed), it is expected that additional amendments will be negotiated, drafted, and published as consumers and industry groups advocate for additional changes.

Following on the heels of the European General Data Protection Regulation (“GDPR”) (See Does the GDPR Apply to Your U.S. Based Company?), the CCPA is a reminder that data privacy protection initiatives are spreading across the U.S. and globe. Brazil, India, Indonesia, and the Cayman Islands recently enacted, upgraded, or drafted comprehensive data protection laws. In May, Vermont passed a law requiring data brokers to implement a written information security program, disclose to individuals what data is being collected, and permit individuals to opt-out of the collection. In April, the Chicago City Council introduced the Personal Data Collection and Protection Ordinance, requiring opt-in consent from Chicago residents to use, disclose or sell their personal information. This fall, San Francisco is scheduled to vote on its “Privacy First Policy”, an ordinance requiring that businesses disclose their data collection policies to consumers as a predicate for obtaining city and county permits or contracts. On the federal level, several legislative proposals are being considered to heighten consumer privacy protection, including the Consumer Privacy Protection Act, and the Data Security and Breach Notification Act.

Given this legislative climate, it is important for organizations to continue developing a set of best practices to ensure the privacy and security of the personal information they collect, use, or store. Key to this process is creating a data inventory to identify what personal information is collected, how it is used, where it is stored, and when it is destroyed. Once this “data mapping” is complete, attention should be directed to drafting and implementing a written information security program (WISP). WISPs detail the administrative, technical and organizational policies and procedures an organization follows to safeguard the privacy and security of its data. These initial steps will help any organization identify and streamline its data processing activities, reduce its exposure in the event of a data breach, and prepare itself for the effective date of CCPA and future data protection legislation.