California's newly enacted Consumer Privacy Act should have little impact for US organizations that have already implemented measures for complying with the requirements of the European Union's General Data Protection Regulation. But for most others the mandate will likely necessitate a thorough review of their data security controls and in many cases potential updates to them. If not, they risk expensive litigation from their own customers.
California governor Jerry Brown June 28 signed into law, AB 375, the California Consumer Privacy Act (CCPA) of 2018. The statute - widely seen as one of the toughest privacy laws in the country - will give consumers in the state unprecedented control over any personal information about them that a company might have collected.
Starting Jan. 1, 2020, CCPA confers upon California residents the right to ask a business for all data on them that the business might have collected. It will give consumers the right to ask companies not to sell their personal data to third parties or to ask them to delete all of their personal data.
The bill requires organizations to disclose exactly what categories of personal information it collects about a consumer - before the organization can actually begin to collect the data. Organizations will have to disclose their information collection sources, and the business purpose for collecting personal data and of any changes to those reasons.
Businesses will also have to disclose the categories of third parties with whom they share the information and obtain explicit opt-in consent for collecting data belonging to individuals that are younger than 16 years of age. Importantly, organizations that collect personal data on California residents cannot refuse service or provide lower service quality to individuals that don't want their personal data to be shared or sold to others.
The biggest concern with the new law is the section pertaining to data disclosures resulting from security control failures. CCPA gives individuals the right to sue companies that violate the statute or suffer a data breach because of their failure to implement and maintain reasonable security controls and processes.
"This seems more problematic to the majority of businesses as they struggle to defend themselves against the constant barrage of cyberattacks seeking the very data that the CCPA enumerates," says Chris Prevost, vice president of solutions at Prevoty.
CCPA allows any consumer whose personal data is exposed to sue the breached entity for damages ranging from $100 to $750 or more per exposed record. "Add in all the other breach-related costs - IT response, forensics and recovery, legal, notification, etc. - and this could push a breach into the realm of an existential threat for many businesses."
The law, which privacy rights groups such as the Electronic Privacy Information Center (EPIC) has called the "most comprehensive consumer privacy state law ever enacted" is the result of a ballot initiative in California that garnered over 660,000 signatures from residents. California's Attorney General's office will have the authority to enforce the law when it goes into effect in 2020.
In intent and in requirements, the California statute is very similar to GDPR. The goal is to give consumers ownership of their personal data; more control over what organizations can do with the data; and the ability to hold businesses liable for failing to adequately protect the data. With California taking the lead many expect it is only a matter of time before other states implement identical statutes.
Some organizations and individuals have criticized the law as being rushed through the state legislature without adequate debate or a chance for organizations to weigh in on the measures. Robert Callahan, vice president of state government affairs at the Internet Association, describes the law as creating a "massive new regulatory regime" on companies. "The bill was written in a hurried and ill-considered process, and received very little input from those affected by the legislation," Callahan says. "Changes will be necessary as businesses of all types look at implementation." Others have called the bill's language vague and open to interpretation.
However, for enterprise security teams that have implemented practices such as strong access control, data encryption, data anonymization, data minimization, and formal incident response capabilities, CCPA should have relatively little impact.
"It may seem a big demand on organizations, but in reality, it shouldn’t be," said Terry Ray, chief technology officer at Imperva. Many global organizations have already implemented similar requirements for GDPR over the last few years. So organizations that want help implementing CCPA requirements have plenty of existing materials, practices, and products to get started, he said. "Whether it’s serendipitous or planned by California, following GDPR might have helped get organizations ready for CCPA."
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