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On Friday, September 27, Governor Jerry Brown signed into law California Assembly Bill 370 (A.B. 370), which amends the California Online Privacy Protection Act  (CalOPPA) requiring businesses to disclose how they respond to Do Not Track (DNT) signals. The new law, which is the first to officially address the DNT mechanism endorsed by the Federal Trade Commission and debated by industry, presents thorny implementation challenges to businesses in the online and mobile space. It comes amidst a flurry of legislative activity placing California (yet again) at the vanguard of privacy and data security law. 

CalOPPA applies to any website, online service oraccording to the California Attorney Generalmobile application (“operator”) that collects personally identifiable information (PII) from “consumers residing in California.” Hence, it effectively applies to any website or mobile app nationwide (and quite possibly worldwide, if it has an English or Spanish interface).

Officially entering into force on January 1, 2014, A.B. 370 expands CalOPPA, which is codified as Section 22575-22579 of the California Business and Professions Code, by introducing two new provisions. These provisions require operators to: (1) explain in their privacy policy how they respond to DNT signals; and (2) disclose whether third parties collect PII on their websites or apps.

While the disclosures required under the new law appear straightforward, they present formidable compliance challenges for covered businesses, given that they mandate the implementation of standards and concepts that are not well settled in law or practice. We examine the language of the new provisions below and discuss some of the resulting complexities.

The “Do Not Track” Disclosure

Section 22575(b)(5) introduces the DNT disclosure requirement. It states:

The privacy policy required by subdivision (a) shall do all of the following: … Disclose how the operator responds to Web browser “do not track” signals or other mechanisms that provide consumers the ability to exercise choice regarding the collection of personally identifiable information about an individual consumer’s online activities over time and across third-party Web sites or online services, if the operator engages in that collection.

This provision requires operators to disclose how they respond to DNT signals. Compliance may place operators in a precarious position, given the lack of clarity concerning the meaning of DNT. While simple conceptuallya DNT mechanism was intended to provide consumers with an easy way to communicate their privacy preferencesthe implementation of DNT has proved daunting in practice. For more than two years, the W3C Tracking Protection Working Group has labored to standardize DNT compliance stumbling on agreed-upon definitions for terms like “tracking,” “third parties,” “de-identified information” and “permitted use.”

As a result, many operators have not yet determined how to respond to the signal, not knowing what exactly a consumer DNT preference means. Moreover, certain user-agents (browsers) have been set to transmit a DNT preference (technically known as a “DNT:1” header) by default, clouding whether the signal reflects a consumer preference at all.

To be clear, the new statutory provision mandates disclosure as opposed to establishing new consumer rights or operator obligations. This means that, regardless of implementation strategy, operators would be well advised to clearly disclose what, if anything, they do upon receiving a DNT preference. One way to explain DNT choices to consumers is by pointing them to a new website set up by the Future of Privacy Forum called All About Do Not Track. The website educates consumers on setting DNT preferences and provides useful insights into the responses of some leading market players.

Third Party Collection of “Personally Identifiable Information”

Section 22575(b)(6) introduces the third party tracking disclosure requirement. It requires operators to:

Disclose whether other parties may collect personally identifiable information about an individual consumer’s online activities over time and across different Web sites when a consumer uses the operator’s Web site or service.

Hence, this provision requires an operator to disclose whether third parties on the operator’s website, online service or app (e.g., third-party ad networks or analytics providers) collect PII about consumers’ online activity over time and across different sites. This provision expands an existing CalOPPA provision requiring operators to identify the categories of third parties with whom PII may be shared.

Compliance with this disclosure too may be difficult, however, given that operators may not know which third parties could collect PII from consumers who visit their sites. This is the case for websites integrating content provided by third parties (e.g., online portals) or engaging service providers who share information with their own third party sub-processors. Moreover, operators engage and contract with additional third parties all the time, requiring them to constantly update their privacy policies to report such changes. Further complicating matters is the fact that CalOPPA’s definition of PII“individually identifiable information about an individual consumer collected online by the operator from that individual and maintained by the operator in an accessible form….”could mean different things to different people and inherently implicates the highly charged de-identification debate. Finally, the reference to “other parties” brings up the unclear delineation between first and third-parties (e.g., is a subsidiary or affiliate an “other party”) that complicated a resolution of a W3C standard.

The Alternative Method to Satisfy the “Do Not Track” Disclosure

Section 22575(b)(7) identifies an alternative method for satisfying the new DNT disclosure requirement. It states:

An operator may satisfy the requirement of paragraph (5) by providing a clear and conspicuous hyperlink in the operator’s privacy policy to an online location containing a description, including the effects, of any program or protocol the operator follows that offers the consumer that choice.

This provision allows operators to link to an existing policy that explains how the operator responds to a DNT signal. One way to comply is to refer users to the FPF’s All About Do Not Track Page. Another is to enroll in an industry group’s opt-out program, such as the Network Advertising Initiative or Digital Advertising Alliance opt-out page, providing consumers with choice.

Sanctions

While there is no private right of action under CalOPPA, the law could be enforced by the California Attorney General. Any penalties for a violation would be under the California Unfair Competition Law, which imposes a civil penalty of up to $2,500 per violation.

Written By

Dennis Holmes

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