UPDATE: California Enacts Several Pieces of New Privacy Legislation

NOTE: This alert was updated with new information on Oct. 29, 2013. Please see updates below.

California is continuing to blaze new trails in the area of online data privacy. Gov. Jerry Brown recently signed into law several new pieces of privacy legislation. The new laws affect all operators of commercial Web sites or online services that collect personally identifiable information from California residents (i.e., most Web sites). As a result, these laws apply generally to companies inside and outside of California that do business in the state. In addition to the new legislation, the California Secretary of State has approved for signature collection a ballot initiative to amend the California Constitution that, if passed, would likely have a dramatic impact on data collection and disclosure practices and could result in a wave of plaintiff class action lawsuits.

UPDATE: The ballot initiative effort was abandoned by proponents after analysts raised concerns about the cost to state and local governments to defend against costly lawsuits. 

California Adds Do Not Track Amendment to CalOPPA

Companies whose privacy policies do not yet address how they respond to Do Not Track signals from browsers now must update their online privacy policies to comply with a new amendment (AB370) to the California Online Privacy Protection Act (CalOPPA) if they collect personal information from California residents. AB370 requires commercial Web sites and services that collect personal data to disclose how they respond to Do Not Track signals from Web browsers. The bill does not prohibit tracking or even require a site to honor Do Not Track requests. Instead, a Web site operator is required to disclose in its privacy policy:

1. How the operator responds to Do Not Track signals or other mechanisms that provide consumer choice about tracking. This disclosure can be satisfied by providing a hyperlink to a program or protocol (such as an industry self-regulatory group protocol) the operator follows that offers the consumer choice.
2. isclose whether other parties may collect personally identifiable information about an individual consumer’s online activities over time and across different Web sites when a consumer uses the operator’s Web site or service. The California Attorney General interprets the existing CalOPPA requirements as pertaining to mobile applications as well as to traditional Web sites. It remains to be seen how the new provisions will be applied in the mobile space.

Operators who fail to provide the required disclosures will be given a warning and 30 days to comply before being found in violation of the statute. The new law takes effect Jan. 1, 2014. 

CalOPPA “Internet Eraser Law”

Gov. Jerry Brown signed into law SB568, which is titled, “Privacy Rights for Minors in the Digital World.” Nicknamed the Internet Eraser Law, the bill amends CalOPPA to require operators to provide California minors the means to remove content or information previously posted online. The statute includes limited exceptions, including when the content is posted by a third party, when state or federal law requires the operator to retain such information or when the operator anonymizes the information. The bill also places restrictions on advertising certain goods or services (including tattoos, drugs, alcohol, tanning beds or e-cigarettes) to minors.

The “Internet Eraser” portion of the law as written is already being met with criticism and confusion over its expected impact. Many Web sites or online services already allow a registered user to delete or modify information on their Web site; however, most online content is replicated, archived, shared and disseminated in a manner that makes it difficult to permanently and effectively “delete” such content. Moreover, some argue that permitting “deletion” of content by one individual may interfere with the First Amendment and other rights of others who may have “Liked” or commented on such content. It remains to be seen how the effects of this legislation will play out in practice. The law takes effect Jan. 1, 2015, so some time remains to sort out how companies can best modify their practices to bring them into compliance with the new requirements. Meanwhile, companies that want to be proactive might consider including in their privacy policies an explanation about how minors under 18 years of age can remove their posted content.

California Expands Data Breach Notification Law

Gov. Jerry Brown signed a bill (SB46) to expand the state’s data breach notification law. The amendment expands the definition of the “personal information” that may trigger a notification obligation after a breach to 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.” The bill also provides new rules for notification in cases of a breach involving a user name or email address, in combination with a password or security question that would permit access to an online account if no other personal information is breached:

• For security breach that does not involve login credentials for an email account:Businesses may notify affected customers by providing the security breach notification in electronic form that directs the person whose personal information has been breached to promptly change his/her password and security question or answer, as applicable, or to take other steps appropriate to protect the online account and all other online accounts for which the person uses the same user name or email address and password.
• For security breach that does involve login credentials for an email account: If the breach involves the login credentials of an email account furnished by the person or business that experienced the breach, the entity that furnished the login credentials may not provide notification to that email address, but may instead provide notice by “clear and conspicuous notice delivered to the resident online when the resident is connected to the online account from an IP address or online location from which the person or business knows the resident customarily accesses the account.”

At present, the California law is the only state breach notification statute that can be triggered by the loss of a user name or email address, although if history is any indication, other states will follow California’s lead. Businesses should examine their current data breach response plans to ensure compliance with the amended California law, which goes into effect Jan. 1, 2014.

California Privacy Initiative Cleared to Gather Signatures

The California Secretary of State’s Office gave the green light to proponents to start gathering signatures for an initiative that, if passed, would amend the California Constitution to create a defined “right of privacy” in “personally identifying information.” Under the language of the initiative, all information that is provided for commercial or governmental purposes is “presumed confidential,” and therefore any disclosure without express authorization by the individual is presumed to result in harm to the individual. By creating a presumption of harm whenever identifying information is disclosed without express permission, the initiative is likely to unleash a rash of plaintiff’s class action and other lawsuits. Moreover, by submitting this as a ballot initiative, the law would not be subject to any review or debate within the state legislature. To qualify for the November 2014 ballot, proponents must gather 807,615 qualifying signatures by Feb. 24, 2014.

UPDATE: The proponents of the ballot initiative decided to abandon the effort after the Legislative Analyst's Office warned it could spur "unknown but potentially significant costs to state and local governments from additional or more costly lawsuits, increased court workload, data security improvements, and changes to information-sharing practices."