United States: Attempt To Expand CCPA Private Right Of Action Fails, While Bills Exempting Employee Data And Otherwise Refining CCPA Advance

Last Updated: June 11 2019
Article by Alan L. Friel, Niloufar Massachi and Taylor A. Bloom

Over the past several weeks, the California State Assembly has voted in favor of advancing to the California Senate bills that would narrow the reach of the California Consumer Privacy Act (CCPA). Senate bills did not fare as well and have died. Two of the CCPA amendment bills moving forward have the potential to greatly benefit businesses by providing exemptions for employee data and loyalty programs. These bills will become law if passed by the California Senate and ultimately signed by the governor.

As we have previously reported, California legislators have introduced numerous bills to amend the CCPA since it first passed. The "house of origin" deadline – the last day for each house to pass bills introduced in that house – was May 31, 2019. Most significantly, AB 25 proceeded forward, clarifying that the definition of a consumer does not include employees, and SB 561 died, ending (for now) the notion of an expanded private right of action. We will continue to monitor the bills that are proceeding. A summary of what has happened with CCPA amendment bills follows below. In addition, we note the status of several bills that are not CCPA amendments but address privacy issues.

Meanwhile, last week Nevada became the first state to pass a CCPA-inspired law, which was signed into law by the governor and becomes effective on Oct. 1, 2019 – months in advance of the CCPA's effective date. The act, which is less comprehensive than the CCPA, is summarized here.

CCPA Bills That Advanced to the California Senate

The following CCPA amendment bills have been approved by the California Assembly and advanced to the California Senate for consideration in the remainder of the legislative term:

AB 25 – Carving Out Employee Data

As we have previously reported, this bill proposes to amend the definition of a "consumer" to exclude job applicants, employees, contractors (engaged by written agreement) and agents. AB 25 passed the Assembly and was ordered to the Senate on May 29, 2019. On May 30, 2019, it was read for the first time and sent to the Committee on Rules to be assigned.

AB 846 – Exception for Customer Loyalty Programs

The CCPA prohibits businesses from discriminating against consumers for exercising any of their CCPA rights, subject to certain somewhat ambiguous exceptions. This bill, which was amended on April 30, 2019, and ordered to the Senate on May 28, 2019, clarifies that businesses' customer loyalty and rewards programs will be outside the scope of the CCPA's discrimination limitations in most circumstances. AB 846 permits a business to offer a different price, rate, level, or quality of goods or services to a consumer, including offering its goods or services for no fee, if either of the following is true: (1) The offering is in connection with a consumer's voluntary participation in a loyalty, rewards, premium features, discounts or club card program; or (2) The offering is for a specific good or service whose functionality is directly related to the collection, use or sale of the consumer's data. Of note, the bill also restricts a business from offering loyalty, rewards, premium features, discounts or club card programs that are unjust, unreasonable, coercive or usurious in nature. The bill defines a "loyalty, rewards, premium features, discounts, or club card program" as "an offering to one or more consumers of lower prices or rates for goods or services or a higher level or quality of goods or services, including through the use of discounts or other benefits, or a program through which consumers earn points, rewards, credits, incentives, gift cards or certificates, coupons, or access to sales or discounts on a priority or exclusive basis."

AB 873 – Refining the Definitions of 'Personal Information' and 'Deidentified'

This bill, which advanced to the Senate on May 22, 2019, originally narrowed the definition of personal information by removing the term "household" and the phrase "capable of being associated with." However, it has been amended to add these terms back in and to add the term "reasonably" before "capable of being associated with."

This bill would also amend the definition of "deidentified" to mean "information that does not identify and is not reasonably linkable, directly or indirectly, to a particular consumer, provided that the business makes no attempt to reidentify the information, and takes reasonable technical and administrative measures designed to:

(1) Ensure that the data is deidentified.

(2) Publicly commit to maintain and use the data in a deidentified form.

(3) Contractually prohibit recipients of the data from trying to reidentify the data."

This would create a more relaxed standard for deidentification, and a somewhat less broad definition of personal information.

AB 874 – Refining the Meaning of 'Personal Information' and 'Publicly Available'

Ordered to the Senate on May 9, 2019, AB 874 proposes to specifically carve out of the definition of "personal information" consumer information that is deidentified or aggregated. It also changes the meaning of "publicly available" by removing the following sentence from the CCPA: "Information is not 'publicly available' if that data is used for a purpose that is not compatible with the purpose for which the data is maintained and made available in the government records or for which it is publicly maintained."

AB 1564 – Consumer Rights Requests

AB 1564, ordered to the California Senate on May 13, 2019, would provide businesses with some flexibility as to the minimum of two designated methods they make available for consumers to submit requests. If passed, the bill would require that a business make available to consumers a toll-free telephone number or an email address and a physical address for submitting their requests to the business; however, businesses that operate exclusively online would not be required to include a physical address. Businesses that maintain a website must still make the website available to consumers for submitting information requests as one of the methods.

AB 981 – Insurance Information

This bill, amended on April 30, 2019, and ordered to the Senate on May 22, 2019, would implement the Legislature's intent to harmonize the consumer privacy protections contained in the CCPA with the requirements of conducting the business of insurance and long-established protections set forth in the Information and Privacy Protection Act (IPPA). It would clarify that Section 1798.105 (which grants consumers the right to request that a business delete certain personal information it has collected about the consumer from the consumer) and Section 1798.120 (which provides consumers a right to opt out of the sale of their personal information) would not apply to the extent that it is necessary to retain or share a consumer's personal information to complete an insurance transaction for a product or service, as defined in subdivision (m) of Section 791.02 of the Insurance Code, that has been requested by the consumer.

AB 1146 – Exception for Vehicle Repair Information

Advancing to the Senate on May 23, 2019, AB 1146 states that, except with respect to Section 1798.100 (consumer right to access personal information and disclose practices), Section 1798.110 (information required upon receipt of an access request), Section 1798.115 (consumer right to opt out of the sale of personal information), and Section 1798.150 (data security provision) of the CCPA, the title does not apply to vehicle information, including ownership information, retained or shared by a new motor vehicle dealer, if done pursuant to, or in anticipation of, a vehicle repair relating to warranty work or a recall. The bill defines "vehicle information" as "the vehicle information number, make, model, year, and odometer reading." It also defines "ownership information" as "the name or names of the registered owner or owners and the contact information for the owner or owners."

AB 1355 – Revising Drafting Errors

This bill, which advanced to the California Senate on May 9, 2019, proposes to revise drafting errors in the CCPA, cleaning up the text of the title. The following are among the revisions this bill proposes to make to the CCPA:

  • Clarifying in Section 1798.110(c)(5) (general privacy notice requirements) that a business that collects personal information about consumers shall disclose "that a consumer has the right to request the specific pieces of personal information the business has collected about that consumer" rather than "the specific pieces of personal information the business has collected about that consumer." If passed, this will have a substantive impact on what must be in a business's public-facing privacy notice and will help alleviate confusion arising from the current language.
  • Clarifying in Section 1798.20(c) (children's opt-in to sale provision) that "consumers at least 13 years of age and less than 16 years of age" must opt in to the sale of their personal information. As currently drafted, the CCPA states that "consumers between 13 and 16 years of age" must opt in to the sale of their personal information, creating ambiguity as to whether 16-year-olds must opt in.

AB 1665 – Children's Opt-in Separate from Terms and Conditions

This bill, which advanced to the Senate on May 20, 2019, would amend the Parent's Accountability and Child Protection Act (Civil Code section 1798.99.1), and would provide that a person or business that conducts business in California and that operates an internet website or application that requires opt-in consent pursuant to the CCPA before selling a child's personal information as defined in Section 1798.140 of the CCPA shall obtain consent in a manner that is separate from the general terms and conditions. In addition, this bill would provide that the failure of a parent to provide parental consent to the sale, as defined in Section 1798.140 of the CCPA, shall not result in the child being denied access to the social media internet website or application. The bill further specifies that parental consent shall not be obtained through the child.

AB 1202 – Data Brokers

AB 1202, which advanced to the Senate on May 28, 2019, provides for data broker registration and provides for the attorney general to publish the brokers' information online so consumers can identify data brokers and exercise their CCPA rights. "Data broker" means a business that knowingly collects and sells to third parties the personal information of a consumer with whom the business does not have a direct relationship. "Data broker" does not include any of the following:

(1) A consumer reporting agency subject to the federal Fair Credit Reporting Act.

(2) A financial institution subject to the Gramm-Leach-Bliley Act.

(3) An entity subject to the Insurance Information and Privacy Protection Act.

It clarifies that data brokers would have to honor consumer opt-outs and all other rights provided under the CCPA, but the purpose of the bill is more to help consumers find data brokers in order to exercise their CCPA rights. The bill's preamble states:

There are important differences between data brokers and businesses with whom consumers have a direct relationship. Consumers who have a direct relationship with traditional and e-commerce businesses may have some level of knowledge about and control over the collection of data by those businesses, including: the choice to use the business's products or services, the ability to review and consider data collection policies, the ability to opt out of certain data collection practices, the ability to identify and contact customer representatives, and the knowledge necessary to complain to law enforcement.

By contrast, consumers are generally not aware that data brokers possess their personal information, how to exercise their right to opt out, and whether they can have their information deleted, as provided by California law.

A data broker that fails to register would be subject to an injunction and liable for civil penalties, fees and costs in an action brought by the attorney general for:

  • A civil penalty of $100 for each day the data broker fails to register as required.
  • An amount equal to the fees that were due during the period it failed to register.
  • Expenses incurred by the AG in the investigation and prosecution of the action.

Any penalties, fees and expenses recovered under this section shall be deposited in the Consumer Privacy Fund, created within the General Fund pursuant to subdivision (a) of Section 1798.160.

On May 29, 2019, it was read for the first time and sent to the Committee on Rules for assignment.

AB 1416 – Government Request and Fraud Prevention Exceptions

AB 1416, which advanced to the Senate on May 29, 2019, provides for exceptions for businesses complying with government requests. Further, it provides exceptions for selling information for the detection of security incidents or fraud.

CCPA Bills That Failed to Pass Their House of Origin

AB 1760 – Privacy for All Act

As we previously reported here, this bill, coined the "Privacy for All Act," was withdrawn from the Assembly Privacy Committee's consideration. Sponsored by a large, diverse coalition of civil rights groups and privacy advocates, it would have significantly increased business obligations and restrictions under the CCPA. Among other changes, this bill would have provided a right for consumers of any age to opt in before a business may share their personal information; removed any ability for businesses to provide certain financial incentives in exchange for greater ability to use personal information; limited the use and retention of personal information by a business to what is reasonably necessary to provide a service or conduct an activity, subject to certain exceptions; repealed any right to cure for businesses; and broadened the duties of businesses in connection with CCPA sections governing the disclosure of, access to and deletion of consumer information, while also narrowing certain CCPA exemptions.

SB 561 – Expansive Private Right of Action and AG Obligations

This bill was the most hotly debated item on the floor in the past month. It would have amended the CCPA sections on consumer remedies by expanding the private right of action under the CCPA to any violation of the title. As we previously reported here, SB 561 would have also effectively eliminated the AG's responsibility to provide guidance to businesses on how to comply with the CCPA, while simultaneously removing the 30-day opportunity for businesses to cure a violation under the CCPA before the AG can seek civil penalties.

On May 16, 2019, the California Senate Appropriations Committee held a hearing on SB 561. The bill was held in committee and under submission past the "house of origin" deadline and is now dead for this legislative season. It may reappear in the future, possibly proposing a more limited private right of action or the ability for local consumer protection authorities such as city attorneys to enforce the CCPA as was suggested in hearings and debates.

AB 1758 Revising Drafting Errors

This bill, which was read for the first time on Feb. 25, 2019, and has not had any activity since, proposed to revise a non-substantive drafting error in Section 1798.100. This would have made the following change: "This section shall not require a business to retain any personal information collected for a single, one-time transaction, if such that information is not sold or retained by the business or to reidentify or otherwise link information that is not maintained in a manner that would be considered personal information." This appears to be a non-substantive change that would not impact the meaning of Section 1798.100(e).

SB 753 – Advertisement Sale Exception

This bill would have amended the definition of sale and created the advertisement service exception. It was set for its first hearing on April 23, 2019, and was canceled at the request of the author, Sen. Stern. This bill would have provided an exception to a sale for disclosures of a unique identifier, but only to the extent necessary to serve or audit a specific advertisement to the consumer. The bill would have also required contracts to prohibit the other business or third party from sharing, selling or otherwise communicating the information except as necessary to serve or audit an advertisement from the business.

Additional Privacy Bills

Bills That Advanced:

AB 1281 – Facial Recognition Technology Disclosure Requirements

AB 1281, which advanced to the Senate on April 25, 2019, provides for facial recognition technology disclosure requirements. This would become effective July 1, 2020, and would require a business in California that uses facial recognition technology to disclose that usage in a physical sign that is clear and conspicuous at the entrance of every location that uses facial recognition technology. AB 1281 also provides that a business that violates these provisions can be liable for civil penalties up to $75 for each violation but not to exceed $7,500 annually. In addition to the annual maximum penalty, an additional penalty of up to $5,000 per location annually may be assessed for knowing and willful violations. On May 8, 2019, the bill proceeded to the Committee on Judiciary and Appropriations.

AB 1138 – Social Media Account Parental Verification

This bill that would amend the Parent's Accountability and Child Protection Act (Civil Code Section 1798.99.1) passed the Assembly on May 23, 2019. On May 24, 2019, it was read for the first time and sent to the Committee on Rules for assignment.

This bill would prohibit a social media provider from allowing a person under the age of 13 to create an account unless they obtain the consent of the person's parent or guardian in a manner that includes reasonable measures to ensure that the person giving consent is the parent or guardian of the person under 13, which would include any method of verified parental consent acceptable under the federal Children's Online Privacy Protection Act of 1998 (COPPA) (15 U.S.C. Sec. 6501 et seq.). If passed, this bill would seem to require parental consent for children's social media even if verified parental consent was not necessary under the federal COPPA law.

AB 1035 – Breach Notification Timing

This bill, which advanced to the Senate on May 9, 2019, proposes to amend California Civil Code 1798.82, California's data breach notification law, which currently requires a business to notify affected individuals of a data breach in the most expedient time possible and without unreasonable delay. This bill originally required companies to notify affected individuals of a data breach within 72 hours following discovery or notification of the breach, similar to what the EU's GDPR requires. It has since been amended to require companies to notify affected individuals no longer than 45 days following the discovery or notification of the breach.

AB 1130 Expands Breach Notification Requirements

AB 1130, which was ordered to the Senate on May 29, 2019, would amend the definition of "personal information" in California's data breach law. In particular, it would add tax identification numbers, passport numbers, military identification numbers and other unique identification numbers issued on a government document commonly used to verify the identity of a specific individual to the definition of "personal information." The bill would also add "unique biometric data generated from measurements or technical analysis of human body characteristics, such as a fingerprint, retina, or iris image, used to authenticate a specific individual" to the definition of "personal information." The bill specifies that "unique biometric data" does not include "a physical or digital photograph, unless used or stored for facial recognition purposes." Further, this bill would authorize a person or business that is required to issue a security breach notification to include in a notification for a breach involving biometric data, instructions on how to notify other entities that used the same type of biometric data as an authenticator to no longer rely on data for authentication purposes.

AB 1395 – Smart Speaker Devices

Ordered to the Senate on May 28, 2019, and coined the "Future of Eavesdropping Act," this bill would provide, among other things, that "any actual recordings or transcriptions collected through the operation of a voice recognition feature by the manufacturer [or its third-party service providers] of a connected television or other connected device with a voice recognition feature for the purpose of improving the voice recognition feature, including, but not limited to, the operation of an accessible user interface for people with disabilities, shall not be used for any advertising purpose, retained, or shared with, or sold to, a third party, or both shared with, and sold to, a third party, unless the user first provides affirmative written or electronic consent." "Voice recognition feature" is defined as "the function of a connected television or other connected device with a voice recognition feature that allows the collection, recording, storage, analysis, transmission, interpretation, or other use of spoken words or other sounds, except that this term shall not include voice commands that are not recorded or transmitted beyond the connected television or other connected device with a voice recognition feature." "Other connected device with a voice recognition feature" is defined as "any device equipped with a voice recognition feature sold in this state, including, but not limited to, a wireless speaker and voice command device sold in this state with an integrated virtual assistant that offers interactive actions and hands-free activation, or a cellular telephone, tablet, or other device sold in this state with an integrated virtual assistant that offers interactive actions and hands-free activation."

AB 384 – Digital Health Feedback Systems

This bill would expand the definition of "medical information" under the California Confidentiality of Medical Information Act to include any information in possession of, or derived from, a digital health feedback system as defined in AB 384. The bill also would add a new provision to the Civil Code that would require manufacturers or operators that sell or offer to sell a device or software that can be used with a digital health feedback system to a California consumer to arm the device or software, and the system, with reasonable security features, including that the measures be appropriate to the nature of the device, software or system.

Bills That Did Not Advance:

AB 288 – Social Media Services

AB 288 would have required social media providers to give users that close their accounts the option to have their personal information permanently deleted from the company's records. Further, the bill would have prohibited the social media company from selling that information or exchanging that information with a third party in the future. The bill was set for its first hearing on April 23, 2019, but the hearing was canceled at the request of the author, Sen. Cunningham.

AB 950 – Consumer Privacy Protection

This bill would have required that a business that conducts business in California, and that collects a California resident's consumer data, disclose to the consumer the monetary value to the business of his or her consumer data by posting the average monetary value to the business of a consumer's data, including that information in its privacy policy posted on its internet website, and also including in its privacy policy disclosure of any use of a consumer's data that is not directly or exclusively related to the service that the consumer has contracted the business to provide, as specified. The bill would have also required a business that conducts business in California, collects a California resident's consumer data and sells that data to disclose to the consumer the average price it is paid for a consumer's data and the actual price it was paid for the consumer's data upon receipt of a verifiable request for that information from the consumer. This bill also would have established the Consumer Data Privacy Commission, comprising members of academia, civil society and industry, to provide guidance to the Legislature regarding appropriate metrics and methodology for determining the value of consumer data, and required the commission to report its findings to the Legislature on or before Jan. 1, 2021.

What Happens Next?

While so far only Nevada has passed CCPA-inspired legislation, California continues to consider changes to its paradigm-shifting law. In addition, a host of other Golden State privacy and security bills still have a chance to become law. The Legislature is on recess between July 12 and Aug. 12, and the session is over on Sept. 13. By then we will know what bills have passed or fully died, though the governor has until Oct. 13 to pass or veto the bills that were presented to him by Sept. 13. It is expected that the AG will publish proposed CCPA regulations in September. We will continue to monitor these bills and the AG's rulemaking process, as well as legislative developments in other states and at the federal level. For more information, visit our U.S. Consumer Privacy Resource Center or contact the authors.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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