United States: Golden State Privacy Warriors: California Has Just Passed A Number Of Data Privacy Laws; Here Are Your Next Steps

The federal government may be completely unable to pass laws, but that certainly isn't the case with the State of California, which has just completed a data privacy hat trick by passing three significant laws addressing a broad subset of data privacy issues. The big question is: is your online and/or mobile business ready for the coming changes?

Expansion of California's Data Breach Notification Requirements

Under a new law that will become effective on January 1, 2014, California will expand its data breach notification requirements by adding additional types of information to the definition of "personal information" under California Civil Code §§ 1798.29 and 1798.82. Previously, California's notification requirements in the event of a data breach were triggered when the information accessed during the breach included an individual's name, in combination with that individual's (i) social security number, (ii) driver's license or California ID number, (iii) account, credit or debit card number together with a security or access code, (iv) medical information or (v) health information, where either the name or the other piece of information was not encrypted.

Under the new definition, "personal information" will also include "[a] user name or email address, in combination with a password or security question and answer that would permit access to an online account." If your business or organization collects this type of information, there are steps you should take to be ready in the event of a data breach:

  • Perform an audit of your security measures. Online account information is a common target of hackers. Ensuring that sufficient protections are in place may not be able to stop every incident, but it can help limit the disruption to your business that is caused by a data breach incident.
  • Only share personal information of users with third parties when necessary to provide services or products. When it comes to data breach notification, you can be equally responsible if the person or entity who experiences the data breach was a third party who received the information from you. Any vendor or third party with whom you share personal information should be required to meet certain standards for protecting that information.
  • Delete non-essential personal information. By deleting information you no longer need (such as user information linked to closed or inactive accounts), you can limit your risk profile. If you do not already have one, consider implementing a process for periodically deleting information that is no longer required.
  • Have a plan. If the information you collect did not qualify as "personal information" before the expansion, it is likely that you do not have a plan in place to be followed in the event of a data breach. Maintaining a data breach response plan will allow you to keep your attention focused on resolving the data breach incident, rather than worrying about how to provide notice.

You can read our prior reporting on the expansion of California's data breach notification requirements here.

Prohibition on Certain Marketing to Minors; Deletion of Minor's Information upon Request

Effective January 1, 2015, new provisions will be added to California's Business and Professions Code that address marketing certain products to minors and the collection and deletion of information posted by minors. Under the new provisions, an operator of an online service that is directed toward minors under the age of 18 is prohibited from marketing certain products (including alcoholic beverages, firearms, ammunition, spray paint, cigarettes, fireworks, tanning devices, lottery tickets, tattoos, drug paraphernalia and obscene materials) on its online service. This same prohibition also applies where the online service is not directed toward minors, but the operator of that service has actual knowledge of a minor using the service and the advertisements are specifically directed to that minor based on information the minor has provided.

In addition, the operator of an online service directed toward minors (or, if not directed toward minors, where the operator has actual knowledge that a minor is using the service), will be required to (i) permit minors to remove or request the removal of content or information posted by that minor, (ii) provide notice to minors describing their right to have content deleted, (iii) provide instructions for removing or requesting deletion of content and (iv) caution minors that such deletion does not ensure complete or comprehensive removal of content or information posted by that minor.

Out of the three new data privacy laws, this law is the most controversial since it expands on and deviates from the protections provided by the federal Children's Online Privacy Protection Act, as amended. It will be critical to begin taking steps now to prepare for the January 1, 2015 effective date:

  • Consider whether your online service is directed toward children. Under the new §22580, an online service is considered "directed to minors" if it is created for the purpose of reaching an audience that is predominately comprised of minors, and is not intended for a more general audience comprised of adults. In a few cases making this determination will be easy, but for the majority of services, figuring out whether the service is directed toward minors will need to be given careful consideration because the audiences for some products (such as video games, popular music and cartoons) have both minor and adult fan bases.
  • Review the types of products marketed or advertised on your service and understand how your targeted marketing works. If the products marketed on your service include any of those listed under §22580(i), then it will be important to understand whether advertisements for those products are targeted on the basis of user-supplied information. If your advertised products include any of the restricted products, further careful consideration should be given to whether your service can be construed as being "directed to minors."
  • Develop a plan for processing requests from minors to delete information. The timely processing of requests to delete information from minors will be key. Consider which member of your personnel will handle deletion requests, and implement policies requiring those requests to be processed within a designated period of time.
  • Update your policies to include clear instructions regarding how to delete information. Most online services already allow a user to delete content and information that he or she has uploaded. These services, however, will need to be sure that they update their online policies to include instructions for doing so.

You can read our previous reporting on the changes to privacy rights for California minors here.

New "Do Not Track" Disclosure Requirements for Privacy Policies

California has amended §22575 or its Business and Professions Code to include additional required disclosures in online privacy policies. California's Online Privacy Protection Act ("CalOPPA") requires that the operator of a website or online service maintain a privacy policy with a posted effective date that includes a description of (i) the type of personal information collected, (ii) the third parties with whom personal information is shared, (iii) the process for users to review or change their information (if any) and (iv) how users will be notified of changes to the privacy policy.

As amended, CalOPPA requires that, in addition to the information listed above, the privacy policies for websites and online services disclose how their sites or online services respond to "do not track" signals or similar tools and settings, and whether other parties may "collect personally identifiable information about a consumer's online activities over time and across different Web sites when a consumer uses the operator's Web site or service." This amendment to CalOPPA will take effect on January 1, 2014.

If your website or online service is located in California or has California users (which is likely .... there are just so many of us), then updates to your privacy policy may be required. There are steps you should take to ensure that you remain in compliance with CalOPPA:

  • Understand how your service responds to "do not track" signals. Be sure to ask the question of your developers who are in a position to know, because the answer may surprise you. Privacy policies can create liability for online service operators if the disclosures they contain are not accurate.
  • Review the practices of any third parties with the ability to track users on your service. For purposes of making the new required disclosures, you will need to understand how those third parties track your users and whether they are capable of doing so before or after the users leave your service. This should be of particular concern to mobile application operators, since mobile applications generally have a number of third parties operating in the background of the application.
  • Take the opportunity to review your policy in its entirety. Often a business or service changes and the employee/contractor making the change does not realize that the privacy policy has been impacted. We recommend that your privacy policy be reviewed by (i) technicians and developers who understanding the mechanics of how the service operates, (ii) financial and marketing personnel who understand how user information is monetized and (iii) any other member of your team who accesses or handles user information.
  • Retain the prior version of the policy in your records. You should keep detailed records of past iterations of your privacy policy, including the dates on which that policy was posted to the site. The new version should have an updated effective date to distinguish it from the prior version.
  • Consider notifying your users of the changes. Depending on the content of the disclosures you add, it may be advisable to notify your users of the changes, and require that they acknowledge that they have read and understand the updated policy.

You can read our prior reporting on California's "Do Not Track" disclosure requirements here.

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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Jake Romero
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