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Understanding US Data Privacy Law Fines

Understanding US Data Privacy Law Fines

Data Privacy violations continue to make headlines. Lawmakers in the United States, specifically the California Privacy Protection Agency (CPPA) Board of Directors (the Board), are taking steps to aggressively enforce strict data privacy regulations. To ensure that companies handle personal data responsibly, US data privacy laws now impose severe fines on those found to mishandle, neglect, or fail to cure breaches of privacy. This article explores US data privacy law fines, their significance, and the measures businesses must take to protect consumer information and respond to Data Subject Rights Requests (DSRs).

The Evolution of Data Privacy Laws in the US

The foundation for data privacy laws in the US can be traced back to the early 1970s with the enactment of the Fair Credit Reporting Act (FCRA) and the Privacy Act. This landscape has significantly changed with the evolution of the internet and marketing teams data collection practices.

In recent years, several landmark data privacy regulations have shaped US data privacy, including the California Consumer Privacy Act (CCPA) and the European Union’s General Data Protection Regulation (GDPR). While the GDPR specifically targets European businesses, it also applies to any organization worldwide that handles the personal data of EU residents.

Unlike the EU covering many countries with a unified law, the US does not have a unifying federal privacy act. The US is a patchwork of state-level privacy regulations with varying degrees of provisions and enforcements.

The Significance of US Data Privacy Law Fines

To incentivize compliance with data privacy laws and discourage negligent behavior, lawmakers have introduced substantial fines for non-compliance with some aggressive enforcement measures. All US states have data breach laws. Data breaches can have severe consequences for data subjects, including identity theft, financial fraud, and reputational damage. Privacy breaches on the other hand is defined as the loss of control, compromise, unauthorized disclosure, unauthorized acquisition, or any similar occurrence where:

  • a person other than an authorized user accesses or potentially accesses data or
  • an authorized user accesses data for other than authorized purposes.

A breach of data is always a breach of privacy. But a breach of privacy may not be a breach of data. A data breach is when unauthorized access to personally identifiable information occurs either via bad actors, poor data protection practices or accidental transfer of consumer data. A privacy breach can be as simple as not informing consumers of data collection practices and not informing them that data is shared with third parties. These terms sometimes have significant overlaps and can come with compounding fines.

As of July 1, 2023, there are currently four US privacy laws in enforcement:

  • The California Consumer Privacy Act
  • The Virginia Consumer Data Protection Act
  • The Colorado Privacy Act
  • The Connecticut Data Privacy Act

The Utah Consumer Privacy Act will go into effect on December 31, 2023.

The California Consumer Privacy Act Fines

In the initial ruling of the CCPA, the Office of the Attorney General of California has been authorized to take civil actions under the law for violations. The CPRA established a new agency with this same authority called the CPPA. Businesses are liable to pay the civil penalties for the violations below (but not limited to pending an investigative sweep):

  • Failing to maintain a CCPA-compliant Privacy Policy
  • Failing to respond to consumers’ requests under the CCPA rights
  • Failing to provide adequate notice when collecting personal information
  • Selling consumers’ personal information without providing an opt-out
  • Discriminating against consumers who exercise their CCPA rights

Under the CCPA, California residents are also empowered with the private right to action. This means consumers have the ability to personally take an organization to court and pursue civil legal claims against them for violating the law. If and when a consumer believes that their rights have been infringed upon, the CPPA has streamlined this process by creating an official CPPA Complaint Form.

Intentional violations of the California Consumer Privacy Act (CCPA) can bring civil penalties of up to $7500 for each violation in a lawsuit brought by the California Attorney General on behalf of the people of the State of California. The maximum fine for other violations is $2500 per violation.

It is important to note that the California AG has already taken enforcement actions against organizations that did not comply with the CCPA. As of July 1, 2023, organizations no longer have a cure period. Instead, the AG and the Board are sending out letters to organizations informing them of potential violations in the form of the Investigative Sweep.

Virginia Consumer Data Privacy Act Fines

Enforcement under the VCDPA is similar to the CCPA. The Law will be enforced by the Virginia AG and allows for a 30-day cure period for notified violations. The VCDPA requires that business provide an express written statement that the alleged violations have been cured and that no further violations will occur. Uncured non-compliance can result in a civil penalty of up to $7,500 per violation. Unlike the CCPA, it does not create a private right of action.

Colorado Privacy Act Fines

The Colorado Privacy Act (CPA) fine structure is unique among other states. The CCPA and VCDPA laws might fine a business $2,500 to $7500 for each individual violation (which can build up pretty fast depending on the number of violations). The CPA imposes a whopping $20,000 per offense! Ranging from $2,000 to $20,000 per violation for noncompliance. There are 5.9 million Colorado residents. That means there is a potential of a $118 billion dollar lawsuit.

The reasoning for such a harsh penalty is because each CPA violation is treated as a deceptive trade practice under another Colorado law: the Colorado Consumer Protection Act. Although the Colorado privacy law penalizes deceptive trade practices at $20,000 per offense, the CPA has a maximum penalty of $500,000 per violation. Relatively minor violations of the CPA can hurt a business far more than other state privacy laws.

Connecticut Data Privacy Act Fines

The Connecticut Attorney General is responsible for enforcing CTDPA. Violations can result in penalties up to $5,000 per willful violation under the Connecticut Unfair Trade Practices Act, restitution, disgorgement, and injunctive relief. Consumers do not have a private right of action. However, up until Dec. 31, 2024, should the attorney general determine that a controller could remedy a violation prior to initiating a lawsuit, then notice must be given to the controller, and they have up to 60 days to cure the violation.

How to Comply with these privacy laws?

Most companies doing business in the US should already be compliant with the CCPA as it has been in effect the longest. However, businesses should take the following actions:

  • Determine if the state law applies to their operations
  • Implement appropriate data security and privacy measures, like using Clarip’s suite of products
  • Restrict and minimize data collection/processing to necessary information only
  • Obtain consent for managing sensitive personal information
  • Establish secure processes for addressing consumer requests
  • Establish data processing agreements
  • Display what, how, and by whom data is located
  • Conduct data protection assessments
  • Create mechanisms for revoking consent
  • Draft a comprehensive privacy notice
  • Avoid discrimination against consumers who exercise their rights

Clarip’s Data Privacy Governance Platform ensures compliance with all consumer privacy regulations. Implementing automated data mapping with Clarip’s patented auto-tagging and categorization technologies, organizations can take the guess work out of the data minimization scenarios. Clarip takes data privacy governance to the next level and helps organizations reduce risks, engage better, and gain customers’ trust!

Contact us at www.clarip.com or call Clarip at 1-888-252-5653 for a demo.

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Mike Mango, VP of Sales

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