Canada: California Now Has Toughest Law In U.S. For The Collection Of Personal Information

Last Updated: September 24 2019
Article by Lisa R. Lifshitz

If you work at a company that engages in cross-border transactions involving consumers, including in California, brace yourself – some additional (and arguably onerous) privacy/data compliance requirements are soon coming down the pike. Following considerable efforts to grapple with the demands of the EU General Data Regulation that likely required myriad changes to both internal processes and external contracts, Canadian companies that do business in California will now be expected to comply with the California Consumer Privacy Act of 2018. Seen by many as "GDPR light", this toughest of U.S. state privacy laws is widely expected to have a profound impact on the way U.S. businesses collect and protect the personal information of consumers that will go far beyond the borders of California.

Fresh on the heels of the Cambridge Analytica scandal, the CCPA (which amends part four of division three of the California Civil Code), was hastily signed into law on June 28, 2018 as a compromise so that a California ballot initiative on data privacy led by real estate developer Alastair Mactaggart would be withdrawn. While the Act technically comes into force on January 1, 2020, the California Attorney General is precluded from bringing enforcement actions under it until the earlier of the enactment of final regulations or July 1, 2020. Affected entities are nonetheless required to implement certain parts of the act, including additional recordkeeping systems, as early as January 1, 2019. 

Recently, various CCPA amendment bills, including Assembly Bill 1355, have been proposed to address technical corrections to the Act and necessary clarifications.  At the moment, the most recent proposals have not yet been acted but additional changes are likely before the act comes into force (watch this space for further updates). 

While the CCPA is very detailed, key terms of relevance to Canadian businesses include the following:

Who is subject to (and must comply with) the CCPA?

The CCPA applies to any business, (including any for-profit entity or an entity that controls such entity, such as a sole-proprietorship, partnership, limited-liability company, corporation, association) that collects consumers' personal information alone or jointly with others, determines the purposes and means of the processing of consumer personal information, does business in California and satisfies at least one of the following thresholds: Has annual gross revenues in excess of $25 million (to be adjusted from time to time); annually buys, sells, receives or shares for commercial purposes the personal information of 50,000 or more consumers, households, or devices; or derives more than 50 per cent of its annual revenue from selling consumers' personal information. 

The act applies only to "consumers" – California residents or individuals domiciled in California who may be out of state for a temporary or transitory purpose. It is worth noting that definition of "selling" personal information includes renting, disclosing, disseminating, making available, transferring, communicating orally, in writing or by electronic or other means consumer personal information to another business (including affiliates) or a third party for monetary or other valuable consideration (not monetary). Also, the CCPA applies to personal information available on any medium – not just information that is collected electronically.

Certain business activities are excluded from the scope of the law, including compliance with federal, state or local laws; civil, criminal or regulatory inquiries and investigations issued by local, state or federal authorities and cooperation with law enforcement agencies and exercising or defending legal claims. Additionally, application of the Act is excluded if the collection or sale of the consumer personal information occurs wholly outside of California, i.e. if the business collected the information while the consumer was outside of California or if no part of the sale of the personal information took place in California and no personal information collected while the consumer was in California was sold. 

The (incredibly broad) definition of personal information

"Personal Information" is defined in the CCPA as "information that identifies, relates to, describes, is capable of being associated with, or could reasonably be linked, directly or indirectly, with a particular consumer or household" and is even broader than the definition of personal data under the GDPR. 

In addition to the obvious identifiers (name, alias, postal address, unique personal identifier, online identifier, IP address, email address, social security number, driver's license number, passport number, credit/debit card numbers, financial information, medical information, health insurance information), the CCPA also protects commercial information such as records of personal property, products or services purchased, obtained or considered (or other purchasing or consuming histories or tendencies); internet and other electronic network activity information (browsing/search history, information regarding a consumer's interaction with a web site, application or advertisement); geolocation data; audio, electronic, visual, thermal, olfactory or similar information; biometric information;  professional/employment related information; and inferences drawn from any of the above information to create a profile about a consumer reflecting their preferences, characteristics, psychological trends, predispositions, behaviour, attitudes and intelligence. In a word: wow. 

Certain types of information are excluded from the definition of personal information, including "publicly available" information. Other information outside the scope of the CCPA includes medical information/protected health information, credit information, financial information, driver's information that are protected under other U.S. statues as well as deidentified and aggregated information.

The CCPA creates four critical basic rights for California consumers, as follows:

The right to know what personal information is being collected about them

Once the CCPA comes into force, California consumers will have the right to request that a business that collects personal information, at no cost, disclose the categories (and specific pieces) of personal information that it has collected about that consumer.  Consumers can ask for detailed disclosure requirements, including the categories of personal information that the business has collected, sold and disclosed for a business purpose, the sources from which the personal information is collected, the business or commercial purposes for collecting or selling personal information and the categories of third parties with whom the business shares personal information.

The right of erasure

Subject to certain exemptions, consumers will have the right to require businesses to erase or delete any personal information collected from its records and direct service providers to delete the consumer's personal information from their records.

The right to say no

Consumers will have the right to opt-out; direct any business that sells personal information about the consumer not to sell such information. Any business that sells consumers' personal information must provide notice to consumers that such information may be sold and that consumers have the right to opt-out of the sale of their personal information. The opt-out lasts until the consumer subsequently provides express authorization for the sale of the consumer's personal information. 

Moreover, minors under the age of 16 will be granted special protection (the right of 'opt-in'). No personal information of minors under the age of 13 can be sold without the express affirmation of the consumer's parent or guardian while the personal information of minors between the ages of 13-16 may not sold unless the consumer affirmatively authorizes the sale of the personal information.

Significantly, any contractual waiver that purports to waive or limit a consumer's rights under the CCPA (including enforcement and remedies) will be deemed to be contrary to public policy and will be void (and unenforceable).

The right to equal service and price

Under the CCPA, business will be expressly prohibited from discriminating against consumers who have exercised any of their rights under the act, for example, because the individual expressly forbade the business not to sell their personal information. Subject to certain exceptions, companies may not: deny goods or services to the consumer; charge different prices or rates for goods or services, including through the use of discounts or other benefits or imposing penalties; provide a different level or quality of goods or services to the consumer; or suggest that the consumer will receive a different price or rate for goods or services, or a different level or quality of goods or services, if the consumer their rights under this Act. 

Unfortunately, various exceptions in the act, coupled with the right of businesses to offer financial incentives (including offering compensation for the collection, sale, deletion of personal information), are somewhat murky and it is hoped that these will be additionally clarified through the enactment of more specific regulations.

Securing personal information

Another likely impact of the CCPA will be an increased emphasis on implementing robust corporate privacy and security compliance measures. The existing California Civil Code already requires a business that owns, licenses, or maintains personal information about a California resident to implement and maintain "reasonable" security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure. However, under the Act a business that suffers a security breach involving consumers' personal information will be deemed to have violated this act and may be held liable for such violation or violations, if the business failed to implement and maintain reasonable security procedures and practices, appropriate to the nature of the information, to protect the personal information from unauthorized disclosure.

Sanctions and Remedies 

The penalties for breaching the CCPA are considerable. After notification from the attorney general, a business has 30 days to cure the alleged violation and any company that fails to do so risks injunctions and fines, namely a civil penalty of $2500 for each violation or $7500 for each intentional violation to be assessed by the Attorney General. Earlier this year several legislative efforts were made to expand the CCPA to include a private right of action as well as statutory damages for all CCPA violations for consumers but these were variously rejected by the state senate. 

At present, consumers do have a right to institute a civil action to recover damages following a security breach involving certain categories of personal information. This private right of action provides consumers the right to bring an individual cause of action or a class action if their nonencrypted or nonredacted personal information is subject to an unauthorized access and exfiltration, theft or disclosure that result from the business's violation of the duty to implement and maintain reasonable security procedures and practices appropriate to the nature of the information. However, the definition of "personal information" for the purposes of this remedy is narrower than as described above and includes an individual's first name or first initial and their last name in combination with various data elements such as social security number, driver's license number/California ID card number, account number, credit or debit card numbers.

Consumers can recover statutory damages in an amount between $100 and $750 dollars per consumer per incident or receive actual damages (in lieu of statutory damages if they are greater), injunctive or declaratory relief, and any other relief the court deems proper. Courts may consider the nature and seriousness of the misconduct, the number of violations, the persistence of misconduct, the length of time of the misconduct, the willfulness of the misconduct, and the amount of the defendant's resources (assets, liabilities and net worth) as well as other relevant circumstances presented by the parties in evaluating the damages.

Next Steps 

Businesses affected by the CCPA will be obligated to take specific actions in advance of enactment to achieve compliance and mitigate risk. These tasks will include, as relevant: implementing appropriate processes to obtain parental or guardian consent for minors under 13 years and the affirmative consent of minors between 13 and 16 years to data sharing for purposes described above; implementing a "Right to say no to sale of personal information" link on the home page of the business' website that will direct users to a web page enabling them, or someone they authorize, to opt out of the sale of the individual's personal information without having to create an account; designating methods for submitting data access requests, including, at a minimum, a toll-free telephone number and a website address; updating the business' privacy policies to include GDPR-like required information, including detailed description of California residents' rights (including categories of personal information to be collected, the purposes for which the categories of personal information to be used at or before the point of collection, the sources, the categories of third parties to whom the data is shared, personal information sold, disclosed for business purposes); putting in place a process that precludes the business not to approach the consumer to opt-back in for 12 months after a California resident opts out and creating necessary record-keeping processes that can track consumer information (from collection through use, sale or deletion) and respond to consumer requests (within 45 days plus one 45 day extension), including searching, compiling and sending reports to consumers.

It is fair to say that California's new law is widely viewed as the benchmark that other states may emulate for their own data-privacy purposes and the CCPA may even become a template for a future U.S. federal privacy law. While Canadian companies doing business in California may not meet the technical requirements that would make them subject to the act, practically speaking they will face increased scrutiny and consumer pressure to comply with certain tenets of the law. Moreover, small and medium size Canadian companies may find themselves in the cross-hairs as they begin to receive addenda from larger U.S. companies requiring them to attest to their full CCPA compliance and will be forced to agree to such burdensome terms as unlimited indemnities for data breaches (which has already started to occur).

Tempting as it is ignore, Canadian entities that may be affected by the Act should analyze their potential exposure under the CCPA and consider taking steps to comply with it sooner rather than later.

The author gratefully acknowledges the excellent writings of Francoise Gilbert, CEO, DataMinding, Inc. and William R. Denny, Partner, Potter Anderson Corroon in the preparation of this column.

This article originally appeared as Lisa's IT Girl column in Canadian Lawyer

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
In association with
Practice Guides
by Mondaq Advice Centres
Relevancy Powered by MondaqAI
Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions