CCPA enforcement starts now and most companies aren’t ready

The California Consumer Privacy Act (CCPA) went into effect on January 1, 2020 with a six-month enforcement grace period. That end date is now here.

The basics. As a refresher, CCPA explicitly applies to companies that qualify under one or more of the following statutory criteria:  

  • Have gross annual revenues in excess of $25 million;
  • Possess the personal information of 50,000 or more consumers, households, or devices; or
  • Earn more than half of their annual revenue from selling consumers’ personal information

A number of categories of businesses are explicitly exempted from CCPA compliance, including certain industries covered by federal regulations. However, most publishers will need to be ready to enable U.S. consumers to opt-out of third-party data transfers and demonstrate compliance to regulators in the event of an investigation or complaint.

Attorney Aaron Tantleff, a partner at law firm Foley & Lardner, offers a sliver of hope that CCPA may not apply to everyone, while cautioning that the law has few geographic boundaries. “We have spoken with many clients that have called in a panic to discover that CCPA does not apply. The applicability of the CCPA, like the GDPR, is not limited to only those organizations based in California. It may apply to organizations that lack any physical presence in the State.”

Broad application to businesses globally. As a practical matter the statute will broadly apply to most commercial enterprises, whether or not they explicitly target California residents.  For example, an early analysis of the legislation by the IAPP says:

Companies may pass [the personal information of 50,000 consumers] threshold more quickly than anticipated because the scope of personal information is broad. Most companies operate websites and inevitably capture IP addresses. Notably, companies need to comply regardless of whether the website targeted businesses or individual customers in California given that the term “consumer” is defined to mean any “resident.” Even individual bloggers and relatively small businesses outside California may find it difficult to ensure that they do not receive personal information of more than 50,000 California resident visitors to their website annually, simply from having it be passively accessible from there, and, within California, most retailers, fitness studios, music venues and other businesses will meet this threshold.

Risks of non-compliance. The California Attorney general can impose financial penalties up to $2,500 for non-willful violations and $7,500 for intentional violations. But these numbers can multiple quickly if thousands or millions of users are implicated. In most cases there will be no liability where the violation is “cured” within 30 days of receiving notice. There is also a private or individual right of action when personal information is wrongfully disclosed under CCPA. (The first CCPA class action lawsuit [.pdf] was filed in February against Hanna Andersson and Salesforce.)

According a recent Ethyca survey of 218 general counsels of technology companies, 56% said they were “unprepared for new privacy regulations coming in around the globe,” which includes CCPA. During the months leading up to the enforcement deadline, 43% of respondents said they had deprioritized privacy preparedness because of COVID-19. The survey also found that lack of resources or cost was the greatest challenge in complying.

What to do now. “For businesses still looking to button up on compliance, the essential — and only — first step is to figure out the personal data you possess and where it lives,” says Cillian Kieran, CEO of Ethyca. “After you’ve built a data map that has a thorough and complete record of the data you hold, and where it lives, you can worry about putting the structures in place to address various compliance tasks. But it all starts with the map.”

Attorney Tantleff adds, “Document everything. By now, organizations should have a robust set of security measures in place. However, under the CCPA, an organization must demonstrate that it has implemented reasonable security measures designed to protect personal information based upon the nature and sensitivity of that information.”

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