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The California Privacy Rights Act (CPRA) was passed in November 2020. It amends the 2018 California Consumer Privacy Act (CCPA) introduced in response to rising consumer data privacy concerns. It has significantly impacted data collection and handling practices, giving consumers more control over how businesses handle their data.
Companies were given until January 1st, 2023, to achieve compliance. This article will discuss the key requirements of the CPRA and provide practical tips for companies to implement the necessary changes to ensure compliance.
What is the California Privacy Rights Act (CPRA)?
The CPRA is California’s most technical privacy law to date. It resembles the EU's older and more popular General Data Protection Regulation (GDPR). The main difference is that the GDPR framework focuses on legal bases for data processing. On the other hand, the CPRA relies on opt-out consent.
The CPRA builds on the six original consumer rights introduced by the CCPA in 2018. As a reminder, the CCPA rights are:
- The right to know what personal information is being collected by a business
- The right to delete that personal information
- The right to opt in or opt out of the sale of personal information
- The right of non-discrimination for using these rights
- The right to initiate a private cause of action – limited to data breaches
CPRA created two additional rights:
- The right to correct inaccurate personal information
- The right to limit the use and disclosure of sensitive information
The CPRA also introduced the California Privacy Protection Agency (CPPA,) which is the privacy enforcement agency for the new regulations.
How does CPRA impact business operations?
Data collection is a nearly universal activity for companies in the 21st century. Significant changes to data collection and handling practices can cause slight disruptions in operations. For example, the new regulations force businesses to re-evaluate their service provider and contractor relationships. Service providers and contractors, regardless of location, must abide by the same laws when dealing with businesses in California.
Since enforcement action is possible even when there has not been a breach, businesses must quickly understand their CPRA obligations and implement reasonable security procedures.
How much does non-compliance cost?
Non-compliance with CPRA regulations results in financial penalties, depending on the nature of the offenses.
- The penalty for a mistake is $2,000 per offense
- The penalty for a mistake resulting from negligence is $2,500 per offense
- The penalty for knowingly disregarding regulations is $7,500 per offense
Since the penalties are on a “per offense” basis, costs of non-compliance can easily reach millions, particularly in the event of a data breach.
7 Step CPRA checklist for compliance
Process the minimal amount of personal information
The CPRA introduces the data minimization principle. Businesses should only obtain the personal information they need for processing purposes. If you collect any more data than data, it’s time to update your collection practices. The collected data must be stored securely. A reputable cloud storage solution is an excellent way to keep consumer data.
Establish a data retention policy
To comply with the retention requirements of the CPRA, you must delete the personal data you no longer need. Establishing a data retention policy is a great first step towards compliance. The policy should include the categories of collected information, their purpose, and the time you plan to store it before deletion.
Review contracts with service providers
Service providers must abide by the same regulations. That’s why any third-party contracts must include adequate measures for handling data to ensure its protection and security. Service providers must notify you if they can no longer comply with your requirements.
Take actions to prevent a data breach
Compliance with regulations is only the first step in consumer data protection. You should also take steps to improve your cyber resilience and minimize the chances of a data breach. Ensure employees use modern tools such as password managers to protect their online accounts. Train employees to recognize common scams attackers use to gain access.
You should also consider regular risk assessments and cybersecurity audits to identify system vulnerabilities. Knowing your risks will help you make the necessary changes to protect your data.
Make it easy for customers to opt out or limit data sharing
The CPRA requires businesses to provide consumers with links where they can change how they wish their data to be handled. Consumers must be able to opt out of the sale or sharing of their data. Additionally, consumers have the right to limit the use of sensitive information such as geolocation, health data, document numbers, etc.
Don’t retaliate against customers who exercise their rights
Retaliation against customers who exercise their CPRA rights clearly violates the new regulations. Customers have rights, and you must comply with them to avoid financial punishment.
California businesses must comply with CPRA regulations. We also see other states implementing the same or similar data protection frameworks. Even if you’re not based in California, understanding these new laws and how they impact your business operations will help you start implementing positive changes.