The California Consumer Privacy Act (CCPA) is a state law that gives consumers the right to know what personal data a business collects, how it's being used, and who it's being shared with. If an organization collects personal data from users, it must disclose this in the privacy policy and provide an opt-out option for users.
The CCPA mandates that businesses maintain a reasonable security procedure by having the following items in their records: a copy of the consumer's contract, written terms of service, and delivery of permits, licenses, or other information related to specific products or services requested by the consumer. It also requires that companies retain consumer contracts for at least three years after the expiration date.
If you are in business or an individual wondering what the penalties are for violating CCPA, you are in the right place. The article will dwell on the act, how it affects business, and the penalties involved.
What Are the Penalties of Violating CCPA: What Is Violation of the CCPA?
Consumers in California are now protected from any breach of their personal data or any compliance oversight by businesses using the California consumer privacy act. There are penalties for violating CCPA, and the policy affects all businesses that sell to consumers in California, irrespective of their location. Consumer lawsuits can come from unintentional or intentional violations.
The act imposes various obligations on businesses that collect personal information from residents of California. It requires that consumers are clearly notified of how personal information is used and provides fines and penalties for non-compliance. The CCPA enforcement is currently reserved for the California attorney general.
So what constitutes a "violation," exactly? If you're not sure whether you've been caught in the crossfire of the CCPA, here's a quick list of some of the most common requirements. A business is deemed to have violated CCPA when they:
Make false or misleading statements.
Misrepresent goods' quality, value, or terms of sale.
Misrepresent consumers’ obligations when entering into an agreement.
Misrepresent a consumer's rights under an agreement.
Not informing customers about collecting personally identifiable information about them on their visits to your website.
Collecting personal information about consumers without disclosing the purpose for which it's being collected.
Not making consumers aware that they have the right to request a list of all third parties with whom the business has shared their information.
Not made available a way for consumers to easily opt-out of having their information shared with parties other than those specified by the business.
Not adequately encrypting any data stored in databases or transmitted over public networks.
Failing to disclose information about goods or services that is necessary to make an informed decision about whether to purchase them.
Failure to maintain the privacy policy.
Failure to respond to any of the consumer requests under the consumers' policy right.
Failure to give adequate information to consumers when collecting their data.
Selling consumers' data without providing them with an opt-out option.
Discriminating against consumers who decide to exercise their rights. Businesses can also be sued when they retain, disclose, or use a consumer's data outside their contract.
Guide to CCPA Violations, Fines, and Penalties
The California Consumer Protection Act (CCPA) is a law that prevents businesses from engaging in unfair marketing or selling practices while protecting consumers’ personal data. Organizations are required to maintain reasonable security procedures on consumers’ personal data. Any intentional or unintentional violations can be a devastating crime for any business, as there are severe fines and penalties.
Each day a business fails to comply is considered a separate violation, and fines are assessed daily until all requirements are met.
The following are some of the most common infractions among businesses:
1. Agents who fail to comply with the notice requirements set forth by the law.
2. Companies who fail to designate an agent for service of process.
3. Companies that fail to adopt reasonable security measures.
4. Companies that have not made a reasonable effort to keep personal information from being subject to unauthorized access or disclosure.
5. Companies that have not made a reasonable effort to prevent the destruction of or unauthorized alteration of records containing personal information.
6. Companies that have not made a reasonable effort to ensure compliance with applicable provisions outlined by the CCPA.
7. Companies that fail to implement privacy protections
What Two Types of Civil Penalties Might a Business Face Under CCPA?
Businesses face two types of civil penalties if they violate the CCPA. The first type is a penalty for intentional violations, which occur when a business knowingly and willingly fails to comply with the CCPA. For these violations, the penalty can be up to $7,500 for each violation.
It applies even if the business hasn't obtained any financial benefit from its violation of the law. The penalty is intended to deter bad actors and ensure that privacy policy is taken seriously by everyone who handles consumers' data.
The second type of civil penalty is for unintentional violations, which occur when a business fails to comply with the CCPA without knowing about it. A business that expresses good faith effort to the policy can be granted the unintentional violation. The penalty can be up to $2,500 per violation.
What Is the Maximum Regulatory Penalty Under the CCPA?
If a business violates the CCPA, it may face civil penalties and other consequences. The two main types of penalties are civil penalties and equitable remedies. Civil penalties are monetary damages the business must pay for violating the CCPA. Equitable remedies are injunctions, which are court orders that require a party to do something or stop doing something specific.
The maximum fine that the California Attorney General may impose is $7,500. However, suppose an individual's information is compromised, the CCPA provides a private right of action in which the individual may recover up to $750 or $7,500 per violation (depending on whether the violation was a negligent data breach or intentional).
Have There Been Any Fines With CCPA?
There has been a case under this policy filed at the San Francisco division of the US district court. Bernadette Barnes, a California resident, sued Hanna Anderson in the case Barnes vs. Hanna Anderson LLP and Salesforce.com.
Barnes alleged that the breach in protecting user data affected him since his sensitive data were now in the hands of hackers. He claimed that Hanna Anderson, a high-end online retailer and the San Francisco cloud base e-commerce platform, failed to protect user data sufficiently, thereby violating the CCPA.
The attorney found that Hanna Anderson left customers' personal details vulnerable in a way that unlicensed persons could access them, and Salesforce did not detect a data breach for almost three months.
During the breach, hackers managed to steal the personal information of almost ten thousand customers. The breached data included their names, credit card information, and addresses.
The plaintiffs suffered extensively due to this breach. It diminished the value of the personal information that hackers now possess. They also incurred costs in identifying the theft, thus depriving them of their CCPA right.
The fine is imposed based on factors such as the nature and gravity of the violation, whether the violation was intentional or not and what kind of consumer information was used by the organization. Rulings can be appealed within 30 days of issuing notices.
This sweeping legislation not only established a new right for consumers to control their data but also empowered them with the ability to request information about what specific information businesses have collected about them. Additionally, it gave consumers and the government greater power to bring claims against those who violate these rules.
What Can a Business Do to Avoid CCPA Penalties?
Violation may cause a business to lose money and customer loyalty when they realize they cannot trust the organization with their personal information since the business is prone to data breaches. Therefore, businesses should know what to do to avoid the civil penalty. A good way is by knowing what the law says and following it as best as you can.
CCPA compliance is a lot of things. Here are some of the things covered in this law:
I) All businesses need a Privacy Policy.
II) Any data breach must be reported within 45 days of the discovery of the said breach.
III) All information collected from customers must be properly disposed of or anonymized when no longer needed for the intended purpose.
IV) Selling personal information or sharing it with third parties without users' consent.
Conclusion
CCPA is a general data protection regulation that protects California residents from data breaches and intentional violations through mishandling consumers’ data. It also protects consumers' data from third parties' access without their authorization.
The law requires organizations to give consumers adequate information on how their data will be used and give them the option of opting out. It is important to note that an alleged non-compliance can lead to lawsuits.
Besides, customers' trust is everything for any business, and when customers realize they cannot trust you with their data, they will go to competitors leading to business failure.