United States: Updates To The CCPA: Draft Regulations And New Amendments

The Situation: On January 1, 2020, the California Consumer Privacy Act of 2018 ("CCPA") goes into effect, with enforcement by the California attorney general ("attorney general") to begin six months after the final implementation of regulations or on July 1, 2020, whichever is sooner.

The Result: Businesses subject to the CCPA have received additional guidance on implementing a compliance program in the form of draft regulations released by the California attorney general, and five amendments to the law signed by the California governor.

Looking Ahead: With the law's enforcement date but months away, businesses subject to the CCPA should consult the attorney general's proposed regulations and adjust compliance efforts to accommodate the five new amendments.

Overview

As the January 1, 2020 effective date of the California Consumer Privacy Act approaches, a recent pair of actions by the state provide covered businesses with more information on compliance with California's groundbreaking privacy law. On October 10, 2019, Attorney General Xavier Becerra released the highly-anticipated proposed regulations implementing the CCPA. The proposed regulations outline the steps covered businesses must take to operationalize compliance with the CCPA. The next day, on October 11, 2019, Governor Gavin

Newsom signed into law five amendments to the CCPA, which attempt to clarify some of the statute's ambiguities in addition to altering the scope of data covered.

Attorney General Becerra Releases Proposed CCPA Regulations

The CCPA requires the attorney general to solicit broad public participation and to promulgate and adopt regulations to further the purpose of the statute on or before January 1, 2020. Attorney General Becerra's draft regulations offer specific guidance in key areas:

Consumer Notice Requirements. The proposed regulations elaborate on the delivery, content, and format of a business's notices of collection (which the regulations provide is not the same as a privacy policy), right to opt-out of a sale of personal information, and of financial incentives. The regulations provide that such notices must (i) be drafted in "plain, straightforward language" that "avoid[s] technical or legal jargon," (ii) available in languages in which the covered entity conducts business; and (iii) accessible to consumers with disabilities through provision of an alternative format.

Notably, the proposed regulations eliminate a business's obligation to provide notice if the entity does not collect information directly from consumer (e.g., through web-scraping or other third-party sources). However, if that business wishes to resell such personal information, the proposed regulations require the business either to provide notice and an opt-out opportunity directly the consumer, or, alternatively, confirm that the source provided a compliant notice and obtain signed attestations from the entity that collected the data from the consumer.

Privacy Policy Content and Format. The proposed regulations add privacy disclosures beyond those identified in the text of the CCPA. For example, a covered business must provide instructions for submitting a verifiable request, the process the business will use to verify the consumer request, and explain how a consumer can designate an authorized agent to make a request on her behalf.

Yet another new privacy policy disclosure applies to entities that collect the personal information of 4,000,000 or more consumers. Such entities must disclose certain metrics concerning the number of consumer requests received and average response time.

Similar to the regulations governing the notices described above, the proposed regulations also dictate the format of a privacy policy, requiring, among other provisions that the policy be presented in a "readable" format (e.g., visible on a smaller device such as a mobile phone or tablet) and in a format that allows consumers to print the policy as a separate document.

Responses to Access, Deletion, and Opt-Out Requests. Notably, the proposed regulations announce two new timing requirements. First, within 10 days of receiving a request for information or deletion, a business must confirm receipt and explain to the consumer the procedures for identity verification and request processing as well as when the consumer can expect to receive a substantive response. Second, a business must respond to a consumer's request to opt out of a sale of personal information within 15 days from date of receipt.

The proposed regulations also provide much-needed clarity concerning how a business can respond to a deletion requests by allowing a business to choose between permanent erasure from existing systems, deidentification of personal information, or aggregation of the personal information.

Finally, under the proposed regulations, covered businesses cannot disclose sensitive data, such as Social Security numbers, driver's license, or other government ID numbers; financial account numbers; health insurance or medical identification numbers; account passwords; or security questions and answers, in their response to a consumer request for specific pieces of personal information.

Verification of Consumer Requests. The proposed regulations require a business to establish, document, and comply with a "reasonable method" of verifying the identity of a consumer who makes a request for information or deletion. The method by which a business chooses to verify must be scaled to the sensitivity of the data request. To that end, the proposed regulations provide factors a business should consider when implementing a verification method: Where feasible, matching the identifying information provided by the consumer to the personal information already maintained by the business; avoiding collection of personal information such as a Social Security number or driver's license number; and considering the type, sensitivity, and value of personal information maintained by the consumer, risk of harm to the consumer from unauthorized access or deletion, or likelihood that the request is fraudulent or malicious.

Offline Collection. Unlike the text of the CCPA, the proposed regulations address certain requirements for businesses that interact with consumers offline. For example, the proposed regulations provide for the provision of notice to consumers in an offline setting by allowing a business to provide a printed notice prior to collecting personal information or to direct the consumer to a web address where the notice can be found on "prominent signage." The proposed regulations also contemplate offline methods for consumers to submit requests. For example, a business that substantially interacts with consumers offline must provide an offline method for opting-out of the sale of personal information.

Five Amendments Signed Into Law

In a previous Alert, we discussed the key provisions of the five amendments Governor Newsom signed into law on October 11, 2019. Of note, two of these amendments include a one-year moratorium from complying with many provisions of the CCPA for employee data (A.B. 25) and employee data from other businesses collected in the business-to-business context (A.B. 1355). However, under A.B. 25, employers are still required to comply with certain disclosure requirements for employee data, and, under A.B. 1355, businesses must comply with the opt-out and anti-discrimination requirements. And under both A.B. 25 and A.B. 1355, businesses are still subject to the data security private right of action for the unauthorized access of employee data and data collected in the business-to-business context. These amendments were passed to clarify the applicability of the CCPA to employment-related data, which was a major concern for businesses trying to comply with the law.

Additional changes to the CCPA from these amendments include:

  • Excluding from the right to opt-out vehicle and ownership data for purposes of vehicle repair relating to warranty or recall (A.B. 1146);
  • Clarifying the methods that businesses must provide for consumers to submit requests (A.B. 1564); and
  • Modifying the definition of "personal information" (A.B. 874; A.B. 1355).

Although many of the changes in these amendments are minor, they provide much-needed clarity on some of the requirements of the CCPA.

What's Next?

While the attorney general's proposed regulations and the new amendments offer some clarity into the establishment of standard operating procedures for handling consumer rights requests and the scope of personal information covered under the CCPA, significant uncertainties remain. For example, neither the proposed regulations nor the amendments address key definitional concerns regarding when a "sale" of personal information occurs in light of the CCPA's broad definition of the term.

The attorney general's office will hold four public hearings across the state for interested parties to provide oral and written comments regarding the regulations. Hearings are set for the first week of December 2019. Interested parties also can submit written comments via email or mail. The public comment period closes on December 6, 2019, at 5:00 p.m. PST.

Three Key Takeaways

  1. Businesses should begin comparing their current compliance programs against the proposed regulations and five amendments to determine whether their programs align or if adjustments are needed.
  2. Both the public comment period for the attorney general's proposed regulations and the four December hearings provide an important opportunity for businesses subject to the law to offer feedback on the attorney general's proposed regulations.
  3. The CCPA will remain in flux and businesses should develop compliance programs that are flexible and adaptable to any new requirements that come along either by the legislature, the attorney general, or through the ballot initiative process.

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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