CCPA: Why Taking a Wait-and-See Approach Could Cost You – Big
May 5, 2020
Consumer privacy may be the name of the game with the newly-enacted California Consumer Privacy Act, but you can’t blame a corporate compliance officer for discovering it’s a “sticker shock” price issue, too.
The CCPA, which is aimed at boosting privacy protections for Golden State residents, went into effect on January 1, 2020. Built on the European Union’s General Data Protection Regulation regulatory model, the CCPA impacts about 75 percent of California businesses – as follows:
Companies that have gross revenue of at least $25 million.
Companies that buy, sell and share the personal information of 50,000 or more consumers, households or devices.
Companies that derive 50 percent of more of their annual revenue from selling consumers’ personal information.
Major Financial Penalties for Non-Compliance
With the rollout so recent, and the current focus of corporate compliance managers on the business impact from the ongoing pandemic, companies may be taking their eye off the ball on the new state mandate.
That would be a huge financial mistake, as the data points out.
According to the Berkeley Economic Advising and Research, California-based financial research think tank , initial compliance costs linked to the CCPA stands at $55 billion in the first half of 2020. That figure doesn’t count on the added costs for companies who are late to the CCPA compliance party.
The primary problem? Most companies weren’t compliant with the CCPA prior to the program’s ramp-up – and many are still figuring how to comply with the mandate amidst a major pandemic.
According to PossibleNOW, a data privacy services provider, 56 percent of Golden State businesses weren’t compliant with the CCPA on the January 1 rollout date. Reasons for non-compliance vary with 35 percent of companies blaming high compliance costs; 32 percent waiting for actual enforcement trends, and 29 percent who said the mandate either didn’t apply to them or weren’t sure the CCPA applied to them.
Procrastination may be tempting in this, the age of pandemic, but the financial costs of being found non-compliant with the CCPA should frighten any company compliance officer.
Consider this from the CCPA rulebook on non-compliance penalty costs:
$2,500 per record for each unintentional violation.
$7,500 per record for each intentional violation.
Think about those figures for a moment. A large company that holds hundreds of thousands – or even millions – of customer data profiles is courting huge financial trouble by dragging their feet on CCPA compliance.
Let’s say a firm is found non-compliant on 1,000 separate customer data privacy accounts. Depending on the resulting fines stemming from the incidents, that company could be fined anywhere from $2.5 million to $7.5 million in CCPA non-compliance penalties.
Plus, that firm will be firmly on the California regulatory radar going forward, and that’s a hot spot where no company wants to reside, not to mention the reputational damage from being deemed untrustworthy of client data.
Don’t Let CCPA Procrastination Happen to You
Yes, we live in historic times and yes, a company’s focus may well be on survival right now thanks to the coronavirus pandemic.
There are straightforward and efficient ways compliance officers can get and stay ahead on CCPA adherence, and avoid having the company shell out millions in non-compliance penalties. These action steps should be a priority for firms lagging on CCPA adherence:
Train your staff on CCPA, document “reasonable” data security safety procedures.
Review all vendor contracts.
Coordinate with your information technology team.
Establish a regular schedule to ensure your firm is in full compliance with CCPA.
Do your due diligence and check what other companies doing business in California are doing to better comply with the CCPA.
When building your processes, consider upcoming, similar but-not-identical consumer privacy regulations underway at other jurisdictions.
Doing so is no luxury – it’s a necessity given California’s reputation for being harsh on companies that don’t play ball with its ever-growing list of compliance mandates.
As the old saying goes, you can pay now or pay later – just know that in paying later, the dollar signs grow significantly more sizeable.
Asif Alam is the Chief Executive Officer at Compliance.ai. A leader in shaping disruptive technology, his experience includes building products using AI and natural language processing for GRC, payments, lending, risk, trading, and new solutions, from Fortune 500 companies to startups.
In his most recent role, he served as the Chief Strategy Officer of ThoughtTrace, unlocking new revenue streams and markets, and reignite portfolio growth. ThoughTrace was then acquired by Thomson Reuters in 2021.
He brings more than 20 years of management and business experience; increasing profitability, unlocking new revenue streams and markets, and reignite portfolio growth for companies like Thomson Reuters, Crux Informatics, and Finastra. Asif is a forward-thinking expert driving engagement via client forums, public presentations, and white papers.
Cesar Lee is a Principal at WRV, a venture capital fund focused on early-stage investments in hardware, semiconductor, and other technology-related companies. Previously, he was an investment professional at Riverwood Capital, a technology-focused, late-stage venture capital, and private equity fund. He began his career at RBC Capital Markets, where he was part of the Mergers & Acquisitions group for two years and the Equity-linked & Derivatives group for one year. While at RBC, Cesar spent a majority of his time working on M&A advisory transactions for technology companies.
Cesar’s investment experience includes buyouts, later stage, early stage and seed rounds. Cesar has completed transaction in the U.S., Latin America, and Asia, and in technology sectors including data centers, software, semiconductors, consumer electronics, robotics, big data, and internet.
Maria Devassy is a RegTech, Content, and Technology leader with over 20 years of experience helping companies bridge the gap between technology, product, and business. Maria has held leadership positions with MetricStream, KPMG, Oracle Corporation, and other technology companies. She has launched several successful RegTech products, business partnerships, and advised Fortune 100 clients on risk management, audit, advisory, and compliance business across Industries.
Hugh Cadden is a recognized expert in derivative financial and trading markets including futures, options, and swaps. Hugh is currently a senior consultant and expert with OnPoint Analytics, Inc. an economic, finance and statistical consultancy specializing in expert testimony for complex litigation. He has been specializing in the organization, operation, and regulation of financial and trading markets for over 40 years. Hugh’s experience includes both the public and private sectors and he has held senior level positions with the U.S. Commodity Futures Trading Commission including serving as Director of the Division of Trading and Markets and Deputy Director of Enforcement. He has been qualified as an expert on financial and trading market matters before the Commodity Futures Trading Commission, the Securities and Exchange Commission, the U.S. Tax Court, Financial Industry Regulatory Authority, National Futures Association, American Arbitration Association and federal courts.
Drake Ross is a former bank regulator who specialized in compliance with consumer protection regulations while at the OCC, FDIC, and OTS. While at these agencies, he provided extensive training and guidance and developed materials to ensure full comprehension and proper application of rules, laws, policies, and guidance, and served as a Subject Matter Expert in numerous areas. Because of his expertise, he often presented at agency and industry events. He also played a significant role in successful windup of the 2008 IndyMac Bank failure, where because of his extensive knowledge of the FDIC deposit insurance regulations, he was called upon to administer highly-complex insurance determinations.
Carliss Chatman is an Assistant Professor of Law teaching Contracts, Agency and Unincorporated Entities, Corporations, and Transactional Skills. Her work is influenced by over two decades of service on non-profit boards and involvement with community organizations. Through leadership positions, she has developed expertise in corporate governance and non-profit regulation. She has also been instrumental in strategic planning and fundraising efforts. Prior to law teaching, Professor Chatman was a commercial litigation attorney in Houston, Texas. In practice, she focused on trial law, appeals and arbitration in pharmaceutical, health care, mass torts, product liability, as well as oil, gas, and mineral law. In addition to negotiating settlements and obtaining successful verdicts, Professor Chatman has also analyzed and drafted position statements regarding the constitutionality of statutes and the impact of statutory revisions for presentation to the Texas Legislature.
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Mariam is an Operating Principal at Cota Capital. Mariam has experience providing guidance on strategic and operational planning to Venture and Growth stage companies. Prior to Cota Capital, Mariam spent her career in management consulting as a Director at KPMG. She has experience leading global transformation programs and developing innovative service offerings for Fortune 500 companies in the Technology sector. Mariam has an MBA from UCLA’s Anderson school of management with an emphasis in Finance and Entrepreneurship. She has a Bachelors in Science in Finance and a Bachelors in Science in Economics from Santa Clara University.
Chris Callison-Burch is an Associate Professor in Computer and Information Science Department at the University of Pennsylvania. His research interests include natural language understanding and crowdsourcing. He has served the Association for Computational Linguistics as the General Chair for the ACL 2017 conference, as an action editor for the Transactions of the ACL, as an editorial board member for the Computational Linguistics journal, and an officer for NAACL (the North American chapter of the ACL) and for SIGDAT (the special interest group for linguistic data and corpus-based approaches to natural language processing)
Tom Ladt is an experienced executive and investor. Tom has lead and served on the boards of several public and private companies serving highly regulated industries such as technology, healthcare, real estate, and food processing. Tom has also served in key governmental roles and on numerous community boards.
Jeroen Plink is a global executive with a proven track record of developing and growing businesses, teams, and technologies with innovation and passion. Jeroen was CEO of Practical Law US during its acquisition by Thomson Reuters. He now serves on numerous boards and acts as a strategic consultants for start-ups.
Global Legal and Compliance executive with 15+ years of success in the SaaS technology and financial services industries. Partner to the CEO and executive team in corporate transactions, business development, product expansion, and regulatory navigation during periods of intense growth and organizational change. An advocate of effective risk management that starts with sound business practices and putting the customer first.
Richard Dupree has held multiple Risk, Compliance and Operations positions at regional, national, and global financial services firms including Wells Fargo, Silicon Valley Bank, Bank of the West and BNP Paribas. Rick currently advises FinTechs and RegTechs and sits on industry panels, contributes to industry whitepapers, thought leadership efforts, and speaks at industry seminars on Risk and Compliance challenges faced by banks and FinTechs.
Brian advises clients on legal and regulatory compliance in the financial, tech, and procurement sectors. His passion is helping businesses succeed in heavily regulated environments. As counsel and trusted advisor to businesses of all sizes, and as a former regulator, policymaker, and federal official, Brian acutely understands the unintended burdens that even well-intentioned government requirements can put on innovation and business growth, as well as how to create policies that strike the right balance.
Brian served as National Ombudsman in the Obama Administration, leading the federal Office of Regulatory Enforcement Fairness in assisting hundreds of startups, entrepreneurs, and small business owners in every industry and every state.
Dr. Marsha Ershaghi Hames is Managing Director of Strategy & Development at LRN, a leader in advising and educating organizations about ethics and regulatory compliance, as well as corporate culture, governance and leadership. With the focus of inspired behavior versus required behavior, LRN is a leading voice in the industry for companies to build ethical cultures instead of “check-the-box” compliance approaches. She’s advised Department of Justice corporate monitors on successful program transformation under CIAs (Corporate Integrity Agreements. With over 20 years of experience in leading multinational ethics and compliance strategies, Marsha has become a highly sought-after thought leader on leading Corporate Compliance and Ethics practices.
Carla Carriveau is currently the Senior Managing Counsel at Wealthfront, an automatic investment service firm in Redwood City, California. Carla was previously Senior Counsel, Division of Trading and Markets, at the United States Securities and Exchange Commission. As a former regulator with over 15 years of experience in helping small businesses navigate legal and regulatory needs in the financial services sector, Carla advises Compliance.ai on financial services regulation, the regulatory landscape and industry practices.
