Up for Interpretation: Proposed CCPA AG Regulations Open for Public Comment

On October 10, 2019, the California Attorney General added to the complexity of the California Consumer Privacy Act of 2018 (“CCPA”) by releasing long-awaited proposed regulations that provide guidance on various elements of the CCPA. The text of the proposed regulations is available here and the California Attorney General has made other documents and information relating to the proposed regulations available here. The comment period for the proposed regulations will close on December 6, 2019. Interested parties may review and provide written comments addressing the proposed regulations prior to that date or attend one of four scheduled public hearings on the proposed regulations to be held on December 2-5, 2019.

Rounding out a busy CCPA week, pending CCPA amendments were signed into law by California Governor Gavin Newsom on October 11, 2019. These amendments do not appear to have been taken into consideration by the California Attorney General in drafting the proposed regulations, though the final regulations will likely include some adjustments to align with the statutory amendments. To help you stay current, please click here to see Orrick’s unofficial comprehensive redline of the CCPA incorporating these amendments.

While the Attorney General’s proposed regulations offer some clarity to the CCPA, particularly with regard to the specific requirements for privacy disclosures and how to verify consumer requests, they also introduce new ambiguities that may or may not be resolved in the final draft. Additionally, the proposed regulations introduce some new obligations and requirements beyond the terms of the underlying statute, leaving companies to scramble to update their CCPA compliance plans at the eleventh hour.

Provided below is a summary of the key highlights from the proposed regulations and the important takeaways for businesses that are in the process of implementing CCPA compliance programs.

Notice Obligations

A key pillar of the CCPA is the obligation to provide proper notice of a business’s collection, use, disclosure and sale of a consumer’s personal information. Although the proposed regulations provide some clarity regarding a business’s notice obligations under the CCPA, the propose regulations offer a number of unexpected interpretations and new requirements and will likely lead businesses to revise their compliance approach to notice obligations before the new year.

• Privacy Policy: Section 1798.130(a)(5) of the CCPA requires a business to provide in its privacy policy a description of the business’s general online and offline collection, use, disclosure and sale practices relating to consumers’ personal information, the privacy rights made available to consumers by the CCPA and the means by which consumers can submit a request to exercise those rights. Although the California Attorney General did not publish a form privacy policy, Section 999.308 of the proposed regulations requires a business’s privacy policy to:
  
  • Provide the categories of sources, purposes for collection and categories of third-party recipients of each category of personal information collected (meaning disclosures may need to be specific to each category).
  • State whether the business sells the personal information of minors younger than 16 years of age without affirmative authorization (in addition to the regular sale disclosures already required by the CCPA).
  • Describe the process the business will use to verify a consumer’s request to exercise his or her rights under the CCPA (including any processes specific to children’s personal information).
  • Explain how the consumer can designate an authorized agent to make requests on his or her behalf.
  • For businesses that annually buy, receive for a commercial purpose, sell or share for a commercial purpose the personal information of 4,000,000 or more consumers, provide:
    
    • For each type of consumer request, the number of requests received, complied with in whole or in part and denied within the last calendar year; and
    • The median number of days within which the business substantively responded to requests.
  • Provide consumers with contact information in a form reflecting the manner in which the business primarily interacts with the consumer.
• Notice at Collection: Section 1798.100(b) of the CCPA requires a business to inform consumers, at or before the point of collection, of the categories of personal information to be collected and the purposes for which they will be used. Section 999.305 of the proposed regulations further requires the business to:
  
  • Make the notice visible or accessible where consumers will see it before any personal information is collected:
    
    • For online collection, the business can provide a link to the section of the business’s online privacy policy containing the relevant disclosures.
    • For offline collection, the business can post prominent signage directing consumers to the web address where the notice can be found (i.e., the privacy policy) or provide the consumer with a paper version of the notice.
  • Identify the business or commercial purpose(s) for which each category of personal information will be used (meaning disclosures may need to be specific to each category).
  • Refrain from collecting categories of personal information not disclosed in the notice at collection and provide a new notice if the business intends to collect additional categories of personal information.
  • Refrain from using a consumer’s personal information for any purpose not disclosed in the notice at collection and directly notify the consumer of and obtain explicit consent from the consumer prior to using the consumer’s personal information for a new purpose.
  • Include a link to or the web address of the business’s privacy policy and, if the business sells personal information, a link to or the web address of the “Do Not Sell My Personal Information” submission page.
  • For businesses that do not collect information directly from consumers, the business is not required to provide a notice at collection but is prohibited from selling the consumer’s personal information unless the business:
    
    • Contacts the consumer directly to provide notice about the potential sale of personal information and the consumer’s right to opt out of the sale; or
    • Contacts the source of the personal information to: (i) confirm the source provided notice at collection to the consumer; and (ii) obtain a signed attestation from the source describing how the notice at collection was given and an example of the notice (to be kept for two years by the business).
• Notice of the Right to Opt Out: Section 1798.120(b) of the CCPA requires a business engaging in the “sale” of personal information to provide notice to consumers that their personal information may be sold and that they have the right to opt out of the sale of their personal information. Such a business is also required to provide a clear and conspicuous link on its website titled “Do Not Sell My Personal Information” pursuant to Section 1798.135(a) of the CCPA. The California Attorney General plans to release a model opt-out button or logo in the future that may be used in addition to posting the notice of the right to opt out. Section 999.306 of the proposed regulations currently requires the business to:
  
  • Provide the opt-out notice:
    
    • Online on a separate web page or by linking to the section of the business’s privacy policy that contains the relevant disclosures.
    • For businesses that substantially interact with consumers offline, through an offline method such as posting signage directing consumers to the web address where the notice can be found (i.e., the privacy policy) or provide consumers with a paper version of the notice.
  • Provide the online or offline method by which the consumer may submit the opt-out request.
  • Identify the proof required for a consumer to designate an authorized agent to exercise the consumer’s right to opt out.
  • Include a link to or the web address of the business’s privacy policy.
  • For businesses that do not sell personal information, the business is not required to provide the notice of the right to opt out, but it must:
    
    • State in its privacy policy that it does not and will not sell personal information; and
    • Treat all consumers whose personal information is collected while a notice of the right to opt out is not posted as having validly submitted a request to opt out.
• Notice of Financial Incentives: Section 1798.125(b)(2) of the CCPA requires a business offering any financial incentives (including any price or service difference) for the collection, sale or retention of personal information to notify consumers of the financial incentives offered. Section 999.307 of the proposed regulations further requires a business providing financial incentives to:
  
  • Make the notice available where a consumer will see it before opting into the financial incentive:
    
    • For online financial incentive offers, the business can provide a link to the section of the business’s online privacy policy containing the relevant disclosures.
    • For offline financial incentive offers, the notice must be available in a physical location; however, this section does not specifically state that the business can post signage directing consumers to the web address where the notice can be found.
  • Provide a succinct summary of the financial incentive offered and a description of the material terms of the financial incentive and the personal information implicated.
  • Describe how the consumer can opt in to the financial incentive and how the consumer may exercise their right to withdraw from the financial incentive at any time.
  • Explain why the financial incentive is permitted under the CCPA, including a good-faith estimate of the value of the consumer’s data and the method used to calculate that value. Section 999.337 provides seven different methods a business may use to calculate the “value” of the consumer’s data.
  • Accessibility of Notices: The proposed regulations require all notices to be easy to read, understandable to an average consumer and available in the languages that the business uses in the ordinary course.
    
    • Also note: the proposed regulations also require businesses to make the notices “accessible to consumers with disabilities” or, at a minimum, provide information on how a consumer with a disability may access the notice in an alternative format. This may be particularly challenging for small- to medium-sized businesses. (For reference, we suggest reviewing the Web Accessibility Initiative’s Guidelines, available here).

As noted above, the obligations to provide notice at collection, notice of the right to opt out and notice of financial incentives can reasonably be complied with by including the necessary disclosures in the business’s privacy policy and making the link or web address of the privacy policy available to the consumer at the appropriate time and location.

Consumer Rights

The CCPA grants consumers several new or expanded rights with respect to their personal information, and the proposed regulations provide guidance on how businesses may appropriately handle these rights.

• Requests to Access / Know and Requests to Delete: Sections 1798.00, 1798.10 and 1798.115 of the CCPA provide consumers the right to request that a business disclose certain information to a consumer, including the categories and specific pieces of personal information it has collected about the consumer (a “request to know”), and Section 1798.105 of the CCPA provides consumers the right to request that a business delete personal information it has collected about a consumer (a “request to delete”). Sections 999.312-313 of the proposed regulations establish the rules and procedures for how a business must handle these requests to know and to delete, including mandating the number and type of methods a business must provide for consumers to submit requests, how and when businesses must respond to requests and the factors to be considered when fulfilling requests.
  
  • A business must confirm receipt of a request to know or delete within 10 days and substantively respond to the request within 45 days (which may be extended another 45 days if needed).
  • Specific Requirements for Requests to Know: Section 999.313 of the proposed regulations provide guidelines for businesses to respond to requests to know, including:
    
    • Allowing a business to refer a consumer to its general privacy policy for a request to know categories of personal information, categories of sources and/or categories of third parties, if its response would be the same for all consumers and the privacy policy discloses all information required in response to such a request. Otherwise, a business is required to provide an “individualized response” to the consumer.
    • Requiring that a business use “reasonable security measures” when transmitting personal information to a consumer and not provide a consumer with specific pieces of personal information if such disclosure would create “a substantial articulable, and unreasonable risk to the security” of the personal information, the consumer’s account or the business’s system or networks. In addition, a business may not at any time disclose a consumer’s Social Security number, driver’s license or government-issued id number, financial account number or password, health insurance or medical id number or security questions or answers.
    • If a business maintains a password-protected account with a consumer, allowing the business to comply with requests to know by using “a secure self-service portal for consumers to access, view, and receive a portable copy of their personal information.”
    • Requiring a business to identify the categories of personal information, categories of sources of personal information and categories of third parties to whom personal information is sold or disclosed in a way that provides consumers a meaningful understanding of such categories.
  • Specific Requirements for Requests to Delete: Notably, Section 999.312(d) of the proposed regulations mandates that a business must use a two-step process for online deletion requests, whereby a consumer will (i) submit a request to delete; and (ii) separately, confirm the request. Section 999.313 of the proposed regulations provide guidelines for businesses to respond to requests to delete, including:
    
    • Requiring that a business delete personal information in response to a request by either: (i) “permanently and completely erasing the personal information on its existing systems with the exception of archived or back­up systems” (the business may delay deleting the information from archived or backup systems until the next time such system is access or used); (ii) de-identifying the personal information; or (iii) aggregating the personal information.
    • Allowing a business to present a consumer with the choice to delete only certain pieces of their personal information, only if a global deletion option is still offered and presented more prominently.
    • If a business is relying on a statutory exception to deny a consumer’s request to delete their personal information, as set out in Section 1798.105(d) of the CCPA, requiring that a business not use the personal information for any purpose other than provided for by that exception.
  • Specific Requirements for Requests Relating to Household Information: Section 999.318 of the proposed regulations provide guidelines for businesses to respond to requests to know or delete relating to household personal information, including:
    
    • Allowing a business to respond to such requests by providing aggregate household information (subject to the verification requirements set out below).
    • If all the consumers in a particular household request access to specific pieces of information or the deletion of personal information, and the business can comply with the verification requirements in the proposed guidelines for each consumer, requiring that a business comply with such requests.
• Requests to Opt-Out: Section 1798.120 of the CCPA provides consumers with the right to direct a business not to sell a consumer’s personal information.
  
  • Section 999.315 of the proposed regulations establishes the rules and guidelines for how a business must handle such consumer requests to opt out of the sale of their personal information, including requiring a business to:
    
    • Provide two or more designated methods for submitting requests, which must include at least an interactive webform accessible via a “Do Not Sell My Personal Information” link on the business’s website or mobile application.
    • Consider the methods by which the business interacts with consumers when determining appropriate opt-out methods and offer at least one method for opting out that reflects the way the business “primarily” interacts with the consumer, including offline.
    • If the business collects consumer personal information online, treat user-enabled privacy controls that communicate or signal an opt-out choice as a valid consumer opt-out request.
    • Respond to opt-out requests no later than 15 days from receipt.
    • The business must notify any third parties to whom the business has sold a consumer’s personal information within the 90 days prior to a consumer’s opt-out request and instruct them not to further sell the consumer’s personal information. A business must then notify the consumer when this third-party instruction has been completed.
  • Notably, the proposed regulations state that a consumer request to opt out of the sale of their personal information does not need to be a “verifiable consumer request” and that a business may deny an opt-out request if it has a good-faith, reasonable and documented belief that the request is fraudulent.
  • In addition, Section 999.316 of the proposed regulations specifies that a double opt-in is required for consumers to reauthorize the sale of their personal information after opting out.
• Special Rules Regarding Minors: Section 1798.120 of the CCPA requires both consent from children ages 13-16 to sell their personal information and “affirmative authorization” from a parent or guardian to sell or disclose personal information of a child younger than age 13. Sections 999.330-332 of the proposed regulations establish the rules and procedures for a business to obtain affirmative authorization for the sale of personal information of minors younger than 16 years of age, including requiring a business to:
  
  • For consumers younger than age 13, establish, document and comply with a “reasonable method” for verifying the identity of the parent or guardian affirmatively authorizing the sale of the child’s personal information.^[1] The proposed regulations also provide multiple examples of “reasonably calculated” methods that a business may use to verify the identity of a parent or guardian, including providing a consent form to be signed by the parent or guardian under penalty of perjury or requiring a parent or guardian to call a toll-free telephone number staffed by trained personnel.
  • For consumers ages 13-16, establish, document and comply with a reasonable opt-in process pursuant to Section 999.316 of the proposed regulations (which requires a double opt-in).
  • If a business receives affirmative authorization from a parent or guardian of a consumer younger than age 13 or a consumer between ages 13-16 to sell the consumer’s personal information, inform such individual of the right to opt out of the sale of the personal information later and the process for doing so.
• Verification of Requests: Multiple sections of the CCPA require a business to verify the identity of a consumer making a request to know or request to delete prior to responding to such requests. Sections 999.323-325 of the proposed regulations establish the rules and guidelines for how a business can go about verifying the identities of consumers, including requiring that a business:
  
  • Establish, document and comply with a “reasonable method” for verifying a consumer’s identity, which requires the business to undertake the following:
    
    • When possible, match identifying information provided by a consumer to the personal information already maintained by the business or use a CCPA-compliant third-party verification service.
    • Avoid collecting additional information from a consumer, unless necessary to verify a consumer’s identity.
    • Consider certain factors in determining a “reasonable method” for verification, including: (i) the type, sensitivity and value of the consumer’s personal information; (ii) the risk of harm to the consumer as a result of unauthorized access or deletion; (iii) the likelihood that bad actors would seek to obtain the personal information; (iv) the manner in which the business and consumer normally interact; and (v) the technology available for verification.
  • Implement “reasonable security measures” to detect fraudulent verification activity and prevent the unauthorized access to or deletion of a consumer’s personal information.
  • If a business maintains de-identified information, it is not required to provide, delete or re-identify this information in response to a consumer request.
  • If a business maintains a password-protected account with a consumer, it may verify the consumer’s identity through its existing authentication practices for the consumer’s account.
  • If a business does not maintain a password-protected account for a consumer, adhere to different levels of verification depending on the type of the consumer request:
    
    • For a consumer’s request to know the categories of personal information, a business must verify the consumer’s identity with a “reasonable degree of certainty.” The proposed regulations indicate that this may include matching at least two data points from the consumer with information maintained by the business.
    • For a consumer’s request to access specific pieces of personal information, a business must verify the consumer’s identity with a “reasonably high degree of certainty.” The proposed regulations indicate that this may include matching at least three pieces of personal information from the consumer with information maintained by the business, together with a signed declaration from the requester made under penalty of perjury.
    • For a consumer’s request to delete, a business may verify the consumer’s identity with a “reasonable degree or reasonably high degree of certainty” depending on the sensitivity of the information and risk of harm to consumer from unauthorized deletion.
  • Declining to Respond to Requests. Section 999.313(c) sets forth when a business can decline to respond to a request to know if it is unable to verify the consumer’s identity with a reasonable degree of certainty, if the disclosure could create a substantial and unreasonable security risk, or otherwise, and how the business should respond when denying the request, in whole or in part.
  • Section 999.326 of the proposed regulations state that if a consumer uses an authorized agent to make a request to know or delete their personal information, a business may deny a request if the agent fails to submit proof that they have been authorized by the consumer to act on their behalf. In addition, a business may require written permission from the consumer or require the agent to verify their own identity.

Other Requirements

In addition to providing guidance on the CCPA’s notice obligations and consumer rights, the proposed regulations also provide notable new clarifications and requirements for businesses.

• Service Provider Clarifications: Section 1798.140(v) of the CCPA defines a “service provider” as a for-profit, legal entity that receives personal information from a business for a business purpose and processes personal information on behalf of the business pursuant to a written contract that permits the service provider to retain, use or disclose the information only to perform specified services or as otherwise permitted by the CCPA. Section 999.314 of the proposed regulations clarifies the role and responsibilities of a business that qualifies as a “service provider”. Specifically, the proposed regulations:
  
  • Clarify that a company that qualifies as a “business” under the CCPA and acts as a service provider in some instances need only comply with the CCPA with regard to any personal information that it processes outside of its role as a service provider.
  • Provide that an entity that otherwise meets the requirements under the CCPA of being a “service provider,” but is providing services to an entity that doesn’t qualify as a “business” under the CCPA (i.e., to an individual), may still be deemed to be a “service provider” under the law.
  • Prohibit a service provider from using personal information maintained from one entity that it services or directly from a consumer for the purpose of providing services to another person or entity.
• Record Keeping Requirements: The CCPA as currently written contains no record-keeping requirements. Section 999.317 of the proposed regulations creates new requirements for businesses to maintain records of consumer requests. These requirements state that a business:
  
  • Must maintain records of consumer requests for at least 24 months and may maintain such records in a ticket or log format, as long as the required information is included.
  • May not use the records for any other purpose and also is not required to retain personal information for the sole purpose of fulfilling a consumer request.

In addition, the proposed regulations establish new record-keeping and disclosure requirements (discussed above under “Privacy Policy”) for any business that buys, receives, sells or shares for commercial purposes the personal information of 4,000,000 or more consumers. Such a business is also required to:

• For each type of consumer request, maintain records of the number of consumer requests received, complied with or denied and the median number of days within which the business substantively responded to requests; and
• Establish and enforce a training policy on the requirements of the proposed regulations and the CCPA for all internal personnel responsible for handling consumer requests or CCPA compliance.

Takeaways

The notice accompanying the proposed regulations states that these regulations are meant to provide “clarity and guidance” regarding the CCPA; however, the interpretations and new requirements contained in the regulations present additional, and in some cases significant, compliance burdens for businesses. The proposed regulations are not final and may change significantly prior to the enforcement date (July 1, 2020, at the latest), meaning that businesses subject to the CCPA must continue to monitor for any revisions to the draft regulations that may meaningfully affect their business practices. For now, a business subject to the law should consider undertaking the following when implementing and finalizing its CCPA compliance program:

• Evaluate existing privacy disclosures for potential substantive revisions to comply with the draft regulations, as well as potential operational changes to where and how these disclosures are made.
• Determine what updates, if any, to existing policies and procedures will be needed to comply with the new proposed consumer request protocol and identity verification guidelines.
• Consider whether it has adequate policies and procedures in place to comply with the new proposed record-keeping requirements.
• Update employee training programs for personnel who will be responsible for handling consumer requests and CCPA compliance.

^[1] The proposed regulations state that this affirmative authorization is in addition to any verifiable parental consent required under the Children’s Online Privacy Protection Act, 15 U.S.C. sections 6501, et seq.

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