The California Consumer Privacy Act (CCPA) extends its reach beyond the state's boundaries, impacting businesses that handle the personal data of California residents regardless of their physical location. Adhering to the CCPA not only mitigates legal risks but also enhances reputation, builds customer trust, and supports business expansion.
Who Does CCPA Apply To?
The CCPA governs for-profit entities operating within California, as well as those located elsewhere that process the personal information of California residents and satisfy one or more of the following criteria:
- Annual gross revenue exceeding $25 million.
- Buying, selling, or sharing the personal information of at least 100,000 consumers.
- Deriving 50% or more of annual revenue from the sale or sharing of personal information.
Businesses regulated by federal laws such as HIPAA or the Gramm-Leach-Bliley Act, and nonprofit organizations are generally exempt from CCPA compliance.
CCPA's Applicability Beyond California
While rooted in California, the CCPA's scope is extraterritorial, affecting businesses outside of California and even outside the United States.
Does CCPA Apply to Businesses Outside of California?
Yes, the CCPA covers all for-profit businesses that process the personal information of California residents, provided they meet the specified revenue or data processing thresholds.
Business as Defined by CCPA
The CCPA provides a broad definition of "business," which includes:
- For-profit enterprises (e.g., LLCs, corporations, associations, sole proprietorships) that meet the CCPA thresholds.
- Parent and subsidiary companies of covered businesses that share common branding.
- Joint ventures or partnerships.
- Businesses that, although not meeting the thresholds, voluntarily choose to comply with the law.
Personal information is broadly defined as any data that can identify, relate to, describe, or be reasonably associated with a California resident or household. This encompasses a wide range of data points, including names, contact information, online identifiers, browsing history, purchase history, and inferences drawn from this data. Consequently, CCPA compliance is a critical consideration for businesses globally that interact with California residents.
Examples of CCPA's Application Outside the State
- A Canadian company providing goods or services to California residents and meeting the CCPA thresholds must adhere to California law.
- An international SaaS provider, such as an email service, with users in California must comply with CCPA requirements.
CCPA's Applicability to Online Businesses and Websites
Unlike local businesses with limited customer bases, online businesses and websites possess a global reach. If your website or application collects personal information from California residents, proactive CCPA compliance is essential.
Key aspects to consider include:
- Prominently displaying a privacy policy detailing data collection practices.
- Offering "Do not sell my personal information" and "Limit the use or share of my sensitive personal information" links.
- Implementing mechanisms to honor global opt-out signals.
- Providing a cookie banner and comprehensive cookie policy.
- Establishing accessible methods for consumers to exercise their CCPA rights.
- Strengthening cybersecurity measures with technical and organizational safeguards.
How Does CCPA Affect Other US States?
The CCPA has several impacts on states beyond California:
#1 Protection for California Residents
Regardless of a business's location, if it handles the personal data of California residents, it must comply with the CCPA, even if that state has its own privacy legislation. This requires businesses to:
- Uphold consumer rights (access, deletion, opt-out, etc.).
- Implement security measures to protect data.
- Establish Data Processing Agreements with third parties.
- Ensure transparency and obtain consent where required.
#2 Influence on Other State Privacy Laws
The CCPA has served as a model for data privacy laws enacted by numerous other US states, including Virginia, Colorado, Texas, and Utah. While similar, these laws have unique requirements.
#3 National Impact and Spur on Federal Privacy Talks
The proliferation of state-level privacy laws necessitates businesses operating across multiple states to navigate a patchwork of regulations. While similarities exist, this landscape has also catalyzed discussions regarding a potential federal privacy law in the United States.
CCPA Compliance Tips for Businesses Operating in Multiple States
To achieve and maintain CCPA compliance:
- Thoroughly understand the CCPA regulations.
- Seek expert legal advice tailored to your business.
- Utilize automation technology, such as a Consent Management Platform (CMP), for compliance optimization.
- Generate clear privacy and cookie policies.
- Implement automation for data discovery and mapping.
- Educate employees on CCPA regulations and privacy best practices.
- Deploy robust security measures.
- Establish and regularly update internal data protection policies.
- Conduct regular privacy impact assessments.
- Maintain an accurate inventory of personal information categories.
- Minimize data collection and usage.
- Anonymize or delete unnecessary data.
- Ensure third-party service providers are also CCPA-compliant with contractual agreements.
- Provide multiple convenient methods for consumers to submit requests and respond promptly (within 45 days).
- Store data in a portable format.
How Do Enforcement Agencies Handle CCPA Violations for Out-of-State Businesses?
Initially enforced by the Attorney General, the California Privacy Protection Agency (CPPA) was established in 2023 by the CPRA amendments, expanding enforcement capabilities. Out-of-state businesses are equally accountable for CCPA violations if they handle California residents' personal information and meet the applicable thresholds. Penalties for CCPA violations range from $2,500 to $7,500 per incident per person, with intentional violations incurring higher fines. Notably, Sephora was fined $1.2 million in 2022 for CCPA non-compliance.
FAQ on CCPA Outside the State
Are there any overlaps between the CCPA/CPRA and GDPR for businesses outside California?
Yes, there are some overlaps between CCPA and GDPR, particularly in their focus on transparency and consumer rights. However, key differences exist: GDPR has a broader scope and no defined threshold, enforces an opt-in consent model (unlike CCPA's opt-out), does not directly regulate cross-border data transfers like some GDPR provisions, and offers a less limited private right of action compared to CCPA. Furthermore, GDPR fines can be significantly higher.
How does CCPA impact businesses in states with no similar privacy laws?
The CCPA applies to businesses in states without similar privacy laws if they operate in California and meet the specified requirements. This has led many such businesses to adopt CCPA-aligned privacy practices to ensure compliance, build trust, and avoid penalties.
Do other states have privacy laws similar to CCPA?
Yes, approximately 20 states, including Virginia, Colorado, Connecticut, and Utah, have enacted privacy laws that share similarities with the CCPA to protect their residents' data.