Tag: Personal Information

You Can Run But You Can’t Hide… More On Privacy Regulation, GDPR And California. Who’s Next?

On May 25, 2018, the European General Data Protection Regulation (“GDPR”) went into effect.  US-based companies that had offices in the European Union or European Economic Area (collectively, “EU”) or those companies whose target market consisted of persons living in the EU were forced to take both IT and legal measures to ensure compliance, or face heavy fines or potential court damages.  However, many US-based companies simply decided that they would disable their e-commerce websites to the EU, and discontinue selling products to the EU, as a means of avoiding compliance with the GDPR.

While this strategy of avoidance may be successful for certain companies to avoid taking compliance measures required by GDPR, it will not be successful as a long term strategy as more States (and potentially the federal government) adopt privacy laws similar to the California Consumer Privacy Act of 2018 (“CCPA”).

Passed in June, 2018, the CCPA will become effective January 1, 2020.  Once effective, US companies will have additional regulations with which to comply regarding the processing of personal information (“PI”) of California residents.  PI is defined broadly to include “any information that …relates to … a particular consumer or household”.   The law was designed to provide California consumers with a means of controlling their personal information, putting them in a better position to protect their privacy and autonomy.   Specifically, the CCPA:

  • Gives California consumers the right to know what PI a business has collected about them or their children;
  • Gives California consumers the right to know if such PI has been sold or disclosed for a business purpose, and if so, to whom;
  • Gives California consumers a right to have their PI deleted;
  • Requires businesses to disclose to California consumers if it sells any of the consumer’s PI has been sold, and if so, allows California consumers to request that the business cease any sales of the consumer’s PI;
  • Prevents a business from denying, changing, or charging more for a service if a California consumer requests information about the sale of the consumer’s PI, or refuses to allow the business to sell the consumer’s PI; and
  • Requires businesses to safeguard California consumers’ PI and hold them accountable if such PI is compromised as a result of a security breach arising from the business’s failure to take reasonable steps to protect the security of consumers’ sensitive information.

Who Must Comply?     Companies must comply if, in the course of their business, they receive PI from any California residents and if they or their parent or subsidiary either: (1) generate annual gross revenues in excess of $25 million, (2) collect PI of 50,000 or more California residents, households or devices annually, or (3) generate 50% or more of its annual revenue from selling California residents’ PI.  Interestingly, parent companies and subsidiaries using the same branding are covered by the definition of “business” even if they themselves do not meet or exceed these parameters.  Thus, essentially, most all US companies whose websites collect PI (even though obtaining IP addresses) are subject to the CCPA, unless they can ensure that less than 50,000 California residents or less than 50,000 of their devices visit the company’s site annually.

What about Companies Who Do Not Do Business in California?

Many US companies may have difficulty showing that they do not do business in California.  According to the California Civil Code, only companies whose “commercial conduct takes place wholly outside of California” would be able to avoid the CCPA.  Further, a company outside California is deemed to be “doing business” in California if it actively engages in any transaction for the purpose of financial or pecuniary gain or profit in California”.  Those companies outside California but that are qualified to do business in California may be subject to the CCPA if they enter into “repeated and successive transactions” in California, including online transactions.  However, while this is only limited to California, it is very probably that other states will adopt similar legislation.

Whose Information Is Affected?

The new law defines “consumer” broadly to include not only customers, but also employees, patients, tenants, students, parents and children.  (Cal. Civ. Code Sec. 1798.140(g).  A “resident” includes natural persons who are in California for anything other than a temporary or transitory purpose, and, those natural persons who are domiciled in California who are out of the State for a temporary or transitory purpose.

What Are The Penalties of Non-Compliance?

If a business is not incompliance with CCPA, the California Attorney General’s Office may bring a civil action against the business.   The Office may levy penalties for non-compliance of up to $7500 per intentional violation of any provision or $2500 per violation for unintentional violations that are not cured within 30 days of notification.

What are Companies To Do?

Moving forward, all US Companies must engage in data mapping to determine what PI it collects, and then put in place updated privacy notices, and other procedures to comply with all relevant regulations.  While California is often the ringleader, certainly other states are also developing similar laws aimed at the protecting PI of its residents.  Until such time as a federal privacy regulation is put into place, US companies will need to analyze carefully where they do business and comply with a patchwork of state laws.

To learn more about the CCPA and other privacy related matters, please contact the author:

Natalie A. Remien, CIPP/US at:

nremien@lgattorneys.com or (312) 368-0100.

Unexpected Liability for Service Providers

With “hacking” and identify thefts becoming all too common place, each service provider must place more and more emphasis on protecting itself from legal liability caused by not only its own actions, but the actions of the company(ies) to whom it outsources. This article provides an introduction to contracting for service providers with an eye toward gaining legal platform upon which to adequately defend itself, if necessary.

In addition to government compliance, which will vary depending upon the industry, any company that collects personal information during the course of providing its services must take steps to safeguard itself from legal liability arising due to unwanted disclosures.  One way to provide a legal safety net is to consider the applicable issues in the service provider’s agreement.  The following is an abbreviated checklist.

  1. Whether personally identifiable information will be provided to service provider’s employees, and if so, what measures are taken to narrowly tailor the need to expose such information to only those employees or third parties who need to know in order to provide the service.  In considering this, a service provider may want to consider identifying types of employees or third parties that may be exposed to such information, or even listing such persons and having them sign a confidentiality agreement with respect to such information.
  2. When does a service provider have to notify a customer of a security breach?   Is there an obligation to notify customers of a potential privacy-related compliance issue?  Or, only when a security breach has occurred?  If a security breach is defined, service providers will be required to undertake all tasks from notification to remediation and payment for such remediation upon receipt of a complaint.
  3. While necessary, service providers will want to limit their contractual obligations to comply with compliance with IT management standards such as the International Organization for Standardization certification.
  4. If the service provider receives credit card information of customers, then at the very least, the following issues must be considered:
    1. Limitation of access of personal information to authorized employees or parties
    2. Securing business facilities, data centers, paper files, servicers, backup systems and computing equipment (mobile and other equip with info storage capability;
    3. Implementing network/ device application, database and platform security
    4. Securing info transmission storage and disposal
    5. Implementing authorization and access controls with media, apps, operating systems and equipment
    6. Encrypting highly sensitive personal information stored on any mobile media
    7. Encrypting highly sensitive transmitted over public or wireless networks
    8. Strictly segregating personal information from and info of service provider or its other customers so that personal information is not commingled;
    9. Implementing appropriate personnel security and integrity procedures and practices (conducting background checks, and providing appropriate privacy and info security training to service providers’ employees.

If you have any questions regarding your liability for disclosure of personal information, please contact:

Natalie Remien at:

nremien@lgattorneys.com or (312) 368-0100.

testimonials

"We've worked with Levin Ginsburg since the 1980s...we have grown with them and have a very high level of comfort and confidence with this firm." Jay Nichols, President,
Badger Murphy
"Astute, responsive and practical. Those are three reasons why we work with Levin Ginsburg." Bryan L. Oyster, V.P. and General Manager,
Bentley Forbes