Many companies in the outdoor industry had to comply with Europe’s General Data Protection Regulation (GDPR) when it went into effect in May 2018. The EU law regulates how companies handle personal information from Europe. It also grants Europeans new rights to access, delete, and correct their data.
The GDPR was a sea change in privacy law. It became the most burdensome, generally applicable privacy law in the world. A survey by PriceWaterHouseCoopers found that 77% of businesses expected to pay over $1 million to comply with the GDPR.
In July 2018, California passed a similar law called the California Consumer Privacy Act, or CCPA. Like the GDPR, the CCPA regulates how companies handle personal information. The CCPA grants California consumers new rights to access and delete their data while placing restrictions on entities that collect, store, and sell Californians’ personal information. Many businesses anticipate spending amounts similar to what they spent on GDPR compliance to come into CCPA compliance.
According to the Outdoor Industry Association, the outdoor industry generated $92 billion of consumer spending in California alone in 2017. Additionally, there are nearly 700,000 Californians employed in the outdoor industry—more than in the wine, film and television industries combined. Outdoor retailers and service providers should not underestimate the impact that the CCPA will have on the way they approach the collection, processing, and storage of consumer data.
The CCPA goes into effect on January 1, 2020, and many outdoor companies, including ones that were not susceptible to the GDPR, will have to comply with it. The International Association of Privacy Professionals (IAPP) estimates that over 500,000 businesses in the United States, including over 100,000 businesses in California alone, will need to comply.
With the deadline fast approaching, it is important that members of the outdoor industry understand what the CCPA requires and how to comply. The following white paper briefly outlines (1) who needs to comply with the CCPA, (2) what the law requires, and (3) what the penalties are for noncompliance. Please keep in mind that the following is not legal advice. It is only legal information. There are specific carve outs in the CCPA that will apply to manufacturers. For specific advice on how to comply with the CCPA, please consult an attorney.
Who Does the CCPA Apply To?
It can be difficult to determine whether the CCPA applies to your business. The law is complex, and there are various factors that determine whether your company must comply. Fortunately, the privacy experts at the law firm Wilson Sonsini Goodrich & Rosati distilled those factors into three easy questions that cover most companies.
First, does your company handle personal information from California residents? Keep in mind: the definition of personal information is very broad. Personal information includes any data that has to do with a specific person, including names, addresses, height, weight, preferences, etc. (Click here to learn more about personal information.)
If the answer is no, your business likely does not need to comply with the CCPA. The new law only applies to companies that do business in California, or otherwise handle personal information from California residents. If your company sells directly to California consumers or otherwise tracks the activities of California consumers (for example, using tracking apps for trails or geocaching or even simply by tracking their online activity through website analytics), you should answer yes to this question.
If you answered yes, you also need to answer the next question.
Second, do any of the following apply to your company: (1) you make over $25 million in revenue per year, (2) you handle personal data for 50,000 people, devices, or households from California per year, or (3) you make at least half of your revenue from selling the information of California residents? If none of these three apply, your company likely does not need to comply with the CCPA. Keep in mind that it is a question of $25 million in revenue, not profit. There are a few exceptions (such as when a company shares branding with a parent or subsidiary), so it’s important to speak with a lawyer to know for certain. If any of those three scenarios applies, however, you need to answer the next question.
Third, is your company for-profit? If the answer is no, then your organization likely does not need to comply with the CCPA. The CCPA only applies to for-profit businesses; there is an important exception if your non-profit handles information on behalf of a for-profit entity. In that scenario, your organization would need to comply with the new law.
If you answered yes to all three questions, then your business likely needs to comply with the CCPA—and you have a lot of work ahead of you. The following section outlines the main obligations under the law.
To see an automated version of these questions that generates results for you, please click here.
What does the CCPA Require?
The consumer privacy requirements under the CCPA can be divided into four main parts: (1) disclosures, (2) consumer requests, (3) opt outs, and (4) training. There are other smaller obligations under the law that apply in specific circumstances, but these four sections cover the majority of the new law.
The CCPA requires that a business must disclose the following information to California residents before the company collects their personal information:
- What personal information your company collects;
- Who your company collects the personal information from;
- Why your company collects the personal information;
- Who your company shares the personal information with;
- What categories of personal information your company sells;
- What categories of personal information your company otherwise shares with others;
- What rights consumers have under the CCPA; and
- Who consumers should contact about their rights under the CCPA.
2. Consumer Requests
The CCPA requires that companies allow California consumers to request that covered businesses: (1) provide information about what personal information they have collected and who they have shared their personal information with, (2) delete their personal information, or (3) not sell their personal information. Companies must provide at least two ways for consumers to make requests: over the phone and via their website. Companies have 45 days to respond to each request under the law. The law requires companies to be able to provide data going back to the prior 12 months.
The request requirement under the CCPA is generally considered the most burdensome part of the law. In addition to the upfront changes to privacy policies, contracts, and other documents, business must create a process through which consumers can ask the businesses to disclose what data they have about the consumer, how it is shared, and how they obtained it as well as allow consumers to ask that the business delete or cease sharing their personal information. Businesses are obligated to honor these requests with some exceptions.
Outdoor industry companies that have offices, employees, contractors, or agents in California should watch the progression of AB 25, an amendment that is being considered by the California Senate. AB 25 was originally designed to exempt all employee information from the regulation of the CCPA, but amendments have changed its parameters. If it is passed in its current form, businesses will have to allow employees to make consumer requests as described above (with the exception that businesses will not have to delete employees’ personal information) during the year 2020. On January 1, 2021, the amendment would sunset and employee data would be fully susceptible to the regulation of the CCPA. For those companies that are primarily business-to-business, their heaviest compliance lift may be in regard to employee information.
To learn more about what SixFifty has done to help companies manage their consumer requests, click here.
3. Data Mapping
Data mapping is not an explicit requirement of the CCPA. However, in order to create a robust request management system and to ensure that your company is following the other requirements, data mapping is one of the unwritten requirements that the CCPA imposes.
In order to answer consumer access requests about what information your company collects about a consumer and how it uses it, you need to map your data. The CCPA also requires that your contracts with third party service providers include specific elements. Companies must know who all of their service providers are in order to implement those new contract terms. This is an important step because information sharing with third parties as opposed to service providers is treated as the ‘sale’ of information under the CCPA.
In addition to being a necessary step for achieving CCPA compliance, data maps will give your company a true vision of what data you have and how you are, or are not, using it. Many companies are finding that they have personal information they do not need or use, thus exposing themselves to unnecessary security risks, which are heightened by the fines the CCPA imposes for security breaches.
The CCPA requires that companies have a policy of training anyone in their organization who is involved in (1) compliance with the CCPA, (2) the privacy practices of the company, and (3) handling consumer requests. CCPA training must be updated each year and teach employees how to handle consumers’ personal information according to the requirements of the law, particularly regarding responding to consumer requests under the CCPA. To learn more about what SixFifty has done to help companies train their employees, click here.
What Are the Penalties for Noncompliance
Penalties under the CCPA be divided into two categories: (1) regulatory violations and (2) data breaches. Lawsuits for violations of the CCPA can be brought by the Attorney General or consumers in civil actions.
1. Regulatory Violations
A company can be penalized up to $2,500 for each violation of the CCPA, with that amount increasing to $7,500 for each’ intentional’ violation. An intentional violation includes any action that a company knows that it should take under the law, but chooses not to. Some experts have speculated that violations will be determined on a per-capita basis the way California’s Supreme Court has counted violations in other cases. Under this theory, if a business ignores the disclosure requirements under the CCPA, the California Attorney General could impose a $7,500 fine for each consumer that visited the company’s website—a potentially staggering amount. The Attorney General is expected to give further clarification on this point.
2. Security Breaches
Under the CCPA, if a company did not employ “reasonable” security measures to protect personal information, a company can be penalized $750 per record exposed in a data breach under the CCPA. The company can also be charged with the actual loss experienced by each consumer who had their personal data compromised, whichever amount is higher.The CCPA is a unique law in that it grants citizens this private ‘right of action,’ which means that, instead of waiting to see how the California Attorney General handled a security breach CCPA violation, individual California consumers have the right to sue companies directly for such a breach.
The California Consumer Privacy Act of 2018 is one of the most important privacy laws in the history of the United States. It will affect more businesses in a more profound way than any proceeding privacy statute. The outdoor industry should start preparing early to meet the requirements of the new law. To learn more about how SixFifty can help your company expedite CCPA compliance, visit sixfifty.com/solutions/ccpa. To see a helpful timeline for bringing your business into compliance, click here.
DISCLAIMER: This publication has been prepared by SixFifty, LLC to provide information of interest to our readers regarding the California Consumer Privacy Act. It is not intended to provide legal advice for a specific situation or to create an attorney-client relationship. SixFifty, LLC does not provide legal advice.