GDPR Compliance in the U.S.: What to Know
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December 14, 2022
Virtually every country has enacted some sort of data privacy law to regulate how information is collected, how data subjects are informed, and what control a data subject has over their information once it is transferred. Failure to follow applicable data privacy laws may lead to fines, lawsuits, and even prohibiting a site's use in certain jurisdictions. Navigating these laws and regulations can be daunting, but all website operators should be familiar with data privacy laws that affect their users.
Here are the laws and regulations you should be aware of for 2023. We'll update this list as new laws pass.
Despite numerous proposals over the years, no one comprehensive federal law governs data privacy in the U.S. yet. The American Data Privacy Protection Act (ADPPA) has made it further along the legislative process than any of its predecessors, but it still faces significant hurdles. As of this writing, it’s still uncertain whether the act will overcome or succumb to those hurdles.
In the meantime, however, individual states have acted rather than wait on the federal government. There's a complex patchwork of sector-specific and medium-specific laws, including laws and regulations that address telecommunications, health information, credit information, financial institutions, and marketing.
An important enforcement agency in the U.S. is the Federal Trade Commission (FTC). Its authority to regulate on behalf of consumer protections comes from The Federal Trade Commission Act (FTC Act), which has broad jurisdiction over commercial entities under its authority to prevent unfair or "deceptive trade practices."
While the FTC uses its authority to issue regulations, enforce privacy laws, and take enforcement actions to protect consumers. For example, the FTC might take impose action against organizations that:
Other federal laws that govern the collection of information online include:
The U.S. has hundreds of sectoral data privacy and data security laws among its states. State attorneys general oversee data privacy laws governing the collection, storage, safeguarding, disposal, and use of personal data collected from their residents, especially regarding data breach notifications and the security of Social Security numbers. Some apply only to governmental entities, others to private entities, and others apply to both.
In addition to sectoral privacy laws, the U.S. is experiencing a massive drive toward pushing privacy legislation at the state level. That’s because the federal government hasn’t been able to find a consensus on how to legislate broadly. Rather than wait, state lawmakers have been nudged by consumers, consumer advocates, and even companies to set their own rules.
Of course, companies would rather comply with a single federal standard than hire attorneys and privacy professionals, invest in compliance tools, and establish a robust compliance program that covers all applicable state laws. But states see the lack of any data privacy protections as more damaging than overly complex data privacy protections.
California started the domino effect. While it’s true that only five states thus far (California, Colorado, Connecticut, Utah, and Virginia) have been able to pass a comprehensive law to date, many states are trying. Even if their early bills have failed in previous legislative sessions, they serve as a reference point for Republicans and Democrats to begin their amendment work before any deal can reach its final destination: the governor’s desk.
Here’s a breakdown of where things stand.
The most comprehensive state data privacy legislation to date is the California Privacy Rights Act (CPRA). The CPRA was passed by a ballot initiative in November 2020 and amended California’s previous state privacy law, the California Privacy Protection Act (CPPA). It went into effect on January 1, 2023.
The CPRA is cross-sector legislation that introduces important definitions and broad individual consumer rights and imposes substantial duties on entities or persons that collect personal information about or from a California resident. These duties include informing data subjects when and how data is collected; allowing them to opt-out of data collection; allowing them to access, correct, and delete such information; and restricting how businesses can transfer personal information to other entities.
Many of the above requirements were also included in the CCPA, but once the CPRA passed, the law was amended to include the following:
The CPRA also:
One of the most significant features of the CPRA is its enforcement. While state attorneys general typically handle privacy cases—unless the FTC is involved, and even then, it’s often a partnership—the CPRA establishes a new privacy regulator.
The California Privacy Protection Agency (CPPA) can fine transgressors, hold hearings about privacy violations, and clarify privacy guidelines. It’s a five-member board, and it starts enforcing six months after the CPRA goes into effect on July 1, 2023.
Virginia's Consumer Data Protection Act (CDPA) was passed on March 2, 2021. It grants Virginia consumers certain rights over their data and requires companies covered by the law to comply with rules on the data they collect, how it's treated and protected, and with whom it's shared.
The law contains some similarities to the EU General Data Protection Regulation's (GDPR) provisions and the CPRA. It applies to entities that do business in Virginia or sell products and services targeted to Virginia residents and also meet one of the following:
The CDPA requires companies covered by the law to assist consumers in exercising their data rights by obtaining opt-in consent before processing their sensitive data (non-sensitive data may be collected so long as the consumer is notified), disclosing when their data will be sold, and allowing them to opt-out of data collection. It also requires companies to provide users with a clear privacy notice that enables consumers to opt-out of targeted advertising. In addition, it requires data brokers to honor consumers’ requests to opt out of data processing, among other requirements.
The CDPA went into effect on January 1, 2023.
In June 2020, Colorado became the third U.S. state to pass a privacy law. The Colorado Privacy Act grants Colorado residents rights over their data and places obligations on data controllers and processors. It contains some similarities to California's CPRA, Virginia's CDPA, and the EU’s GDPR.
While there are similarities, such as some form of a right to opt-out, special protections for sensitive data, and the adoption of some privacy-by-design principles, the significant differences are in the details.
The CPA applies to businesses that collect personal data from 100,000 Colorado residents or collect data from 25,000 Colorado residents and derive revenue from the sale of that data.
The law lists five rights granted to Colorado residents once the law becomes effective on July 1, 2023. They are:
There are 17 blanket exemptions within the law. Data exemptions include:
Since the law goes into effect midway through 2023, businesses should expect updates to the law via rulemaking in the first half of the year.
In March 2022, Utah became the fourth state to enact a comprehensive consumer privacy law, which will take effect on December 31, 2023. The Utah Consumer Privacy Act (UCPA) draws from the CDPA, CPA, and CPRA.
The law applies to both data controllers and processors that generate over $25 million in annual revenue and either:
Similarly to the statutes in Colorado and Virginia, there are exemptions for certain types of personal data; however, they’re broader at both the entity and data levels.
The law does not apply to governmental entities or third parties acting on behalf of a governmental entity, tribes, institutions of higher education, nonprofit corporations, business associates, information that meets the definition of protected health information for HIPAA and related regulations, and more.
Financial institutions governed by the GLBA (the Gramm-Leach-Bliley Act) and information in the FCRA (Fair Credit Reporting Act) also aren’t subject to the UCPA. Data processed or maintained in the course of employment is also exempt.
Consumers have the right to:
In contrast to the CDPA and CPA, the UCPA does not include the right to opt-out of profiling nor codify the right to correct inaccuracies in their data.
Connecticut's fifth and most recent state to adopt a comprehensive consumer privacy law. Senate Bill 6, or “An Act Concerning Personal Data Privacy and Online Monitoring” (CTDPA), goes into effect July 1, 2023.
The law also draws from Virginia and Colorado’s statutes, with a few departures. It applies to businesses that, during the preceding calendar year:
The law is the first to specify that payment transaction data is not subject to the law, which is for small businesses that process information to complete a transaction, such as restaurants. Consumers can opt out of data processing for the purposes of targeted advertisements, sale to a third party, and profiling.
The state allows a 60-day period to remedy violations through December 31, 2024.
In July 2019, New York passed the Stop Hacks and Improve Electronic Data Security (SHIELD) Act. This law amends New York's existing data breach notification law and creates more data security requirements for companies that collect information on New York residents. As of March 2020, the law is fully enforceable.
This law broadened the scope of consumer privacy and provides better protection for New York residents from data breaches of their personal information. It requires employers in possession of the New York residents’ private information to “develop, implement, and maintain reasonable safeguards to protect the security, confidentiality, and integrity of the private information.”
Last year, in 2022, the state Attorney General settled with an organization $600,000 for failing to meet minimum standards that led to a breach in security and a leak of personal information. While there have been no recent updates to the law, it is still very active and enforced, as shown by this settlement.
California, Utah, Virginia, Connecticut, and Colorado are the first states to enact broad legislation that has had a national impact, but many other U.S. states are also considering data privacy laws.
Currently, there is active legislation in Michigan, Ohio, Pennsylvania, and New Jersey. There are over 20 states with inactive legislation that may be picked up again in the future or folded into new legislation.
The EU General Data Protection Regulation remains the law of the land, but new data privacy-related laws have been passed in the EU recently—notably, the Digital Services Act and Digital Markets Act. There are several proposals to be aware of in 2023 as well. Here's a refresher on the GDPR and a list of the other proposals you should track to keep your organization up-to-date on data privacy in 2023.
The most crucial data protection legislation enacted to date is the General Data Protection Regulation (GDPR). It governs the collection, use, transmission, and security of data collected from residents of any of the 28 member countries of the European Union. The law applies to all EU residents, regardless of the entity's location that collects the personal data. Fines of up to € 20 million or 4% of total global turnover may be imposed on organizations that fail to comply with the GDPR. Some essential requirements of the GDPR include:
Organizations must notify supervisory authorities and data subjects within 72 hours if a data breach affects users' personal information in most cases.
The new regulation addresses illegal and harmful content by compelling platforms such as Google and Facebook to remove content that doesn’t meet certain standards. The primary principle is “what is illegal offline must be illegal online,” according to the Council of the EU. The Digital Services Act (DSA) entered into force on November 16, 2022. Different provisions of the law will become effective at different times, with the law coming fully into force on February 17, 2024.
It applies to four categories of businesses:
Each category faces different requirements.
All of the above categories must:
Hosting services, online platforms, and very large online platforms must:
Online platforms and very large platforms must:
Very large platforms must:
EU data protection authorities may access, obtain information from, and inspect service providers to inform orders and sanctions. If a business is found to be in violation, it may be fined up to 6% of annual global turnover during the preceding financial year. If an information obligation under the DSA is violated, the maximum penalty is limited to 1% of the previous year’s income or global turnover.
The Digital Markets Act (DMA) covers the largest digital platforms, known as “gatekeepers,” which include companies like Facebook, Apple, Microsoft, and Google. The DMA aims to level the playing field for digital companies and prevent gatekeeper companies from imposing unfair conditions on their competitors. For example, a company like Amazon isn’t allowed to rank products on its site in a way that gives Amazon’s own products and services an advantage.
A company is considered a gatekeeper if it:
Under the DMA, businesses that qualify as gatekeepers must:
Gatekeepers that violate the DMA may be subject to fines of up to 10% of annual global turnover or up to 20% in the case of repeated violations. What’s more, repeated violations may result in non-financial remedies, such as forced divestitures.
Although it isn't a law per se, the EU-U.S. Data Privacy Framework is an important factor to be aware of.
Previously, businesses transferring EU citizens’ data into the U.S. relied on a framework called the Privacy Shield to ensure the data was sufficiently protected, but that framework was deemed invalid during the Schrems II court case. Since then, businesses have relied on standard contractual clauses approved by the European Commission to provide legal protection for data transfers.
However, these clauses are somewhat shaky; U.S. businesses aren’t supposed to rely on them if they are subject to the Foreign Intelligence Surveillance Act’s (FISA’s) Section 702, which allows U.S. intelligence services to conduct searches of foreign communications, which includes EU citizens’ data. The intricacies of Section 702 are outside of the scope of this blog, but the critical thing to know is that it isn’t always clear when a business is subject to Section 702 or not. Thus, the SCCs are risky to use, but there isn’t an alternative legal framework for international data transfers between the EU and U.S.
Until recently, that is.
On October 7, 2022, President Biden issued an Executive Order on Enhancing Safeguards for United States Signals Surveillance Activities. The order outlined the new EU-U.S. Data Privacy Framework, including additional security measures, a redress mechanism for EU and U.S. citizens who feel their rights have been violated, and greater protections for foreign citizens’ data that has been transferred to the U.S. Additionally, the framework requires intelligence agencies to make updates to surveillance-related policies and procedures, followed by a review by the Privacy and Civil Liberties Oversight Board.
Currently, the proposed framework is under review by the European Commission with input from the European Data Protection Board. There will likely be criticisms from European privacy advocacy groups, but if the framework survives, it could be the method businesses use to transfer data between the EU and U.S.
The e-Privacy Regulation (ePR) has been a long time coming. It aimed to come into force alongside the EU’s General Data Protection Regulation in 2018 but has stalled for years. In March 2022, the EU Council agreed on a draft, but regulation isn’t expected until at least 2023. Furthermore, if the ePR does enter into force during 2023, there will be a 24-month transition period. So, at the very earliest, businesses will have to become compliant by 2025.
The ePR, if passed, would create privacy rules for traditional electronic communications services and entities that weren’t covered by the former law, the ePR, such as WhatsApp, Facebook Messenger, and Skype.
It would create stronger rules on electronic communication’s privacy, and it would apply to communications content and “metadata,” that is, data that describes other data. Under ePR, service providers and electronic communications networks must get prior consent from the user before processing their electronic communications metadata.
It would also, importantly, create more straightforward rules on cookies. It would allow users to consent or deny tracking cookies at the browser level, and it would also clarify that websites do not need to get consent for what is called “non-privacy intrusive cookies.” Those cookies allow website features like “shopping carts” to track what a user has ordered. It would also require that organizations enable end-users to withdraw their previously granted consent at least once per year.
The EU’s Artificial Intelligence Act would apply to any company doing business in the EU that develops or adopts “high-risk” AI systems. These systems affect employment, credit, health care, and other critical domains.
The Act was introduced in 2021 and is currently up for consideration in the European Parliament. As of this writing, the Act is up for a vote sometime in the first quarter of 2023. However, given the complexity of AI, this vote may be delayed to incorporate further amendments.
The AI Act would apply extraterritorially, meaning the law will cover companies based elsewhere if they have customers or users inside the EU, effectively making it a global regulation.
Under the Act, businesses with applicable AI systems would have to:
With over 130 data privacy laws across the globe, it isn’t feasible to list and describe each and every one in this blog post. However, here are some important regulations that may apply to your business.
This post covered some of the major laws that have had recent updates. That excludes many smaller laws that simply haven’t been updated recently and details of the above regulations that would be too deep in the weeds for a blog post. And still, this post is well over 5,000 words long!
For businesses that know they only need to comply with one law and have no intentions of expanding to other jurisdictions, it might be possible to handle compliance in-house. It will take time, resources, and effort, but it’s feasible. Once your business becomes subject to multiple laws, a wholly homegrown approach to compliance quickly becomes overwhelmed by the complexity of different laws’ requirements. With complexity comes risk and a weakened revenue stream, whether through fines and penalties, diverted resources that could be spent on revenue generation, or the loss of consumer trust.
Whether subject to one law or multiple, businesses interested in protecting their revenue from risk invest in compliance platforms. The solutions in this category formalize the knowledge of privacy professionals through their capabilities and features, enabling privacy novices and empowering privacy professionals alike.
Gearing up for the new 2023 US State privacy laws? Grab this checklist to help save some time.Download Now
Writer at Osano
Writer at Osano
The Osano staff is a diverse team of free thinkers who enjoy working as part of a distributed team with the common goal of working to make a more transparent internet. Occasionally, the team writes under the pen name of our mascot, “Penny, the Privacy Pro.”
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