CCPA Wants to Know Value of Consumer Data. So Do Businesses
The California Consumer Privacy Act requires companies to disclose the value that consumer data holds to their organization, but for many businesses, those numbers don't yet exist on paper or anywhere else.
June 30, 2020 at 10:00 AM
4 minute read
The original version of this story was published on Legal Tech News
On July 1, the California Attorney General's Office can begin enforcing the California Consumer Privacy Act. But some companies may still be struggling with one requirement in particular. The CCPA mandates businesses publicly disclose the value that consumer data holds to their operation. But chances are that many organizations don't have an exact dollar figure lying around somewhere.
The "financial incentives" requirement stems from a second round of CCPA revisions that were published by California's attorney general in March. It prohibits businesses from offering a different price or service based on a consumer's willingness to exchange personal data, unless that difference is "reasonably related to the value of the data."
Jarno Vanto, a partner at Crowell & Moring, used video streaming services as an analogy. Users with a standard subscription typically have to engage with some kind of advertising during their viewing experience, while those who wish to forgo commercials altogether will likely have to pay a higher monthly rate in order to compensate for the lost advertising revenue.
But when it comes to consumer data and the CCPA, businesses need consistent metrics or valuations in place in order to defend such a practice. "They actually have to give thought to it [and] document the process in order to justify why they are treating people who exercise their privacy rights differently from those that don't," Vanto said.
However, while data has become increasingly important to businesses situated across a variety of industries, that reality isn't necessarily reflected in an organization's cultural or accounting practices. Dominique Shelton Leipzig, co-chairwoman of Foley & Lardner's ad tech privacy and data management practice, indicated that many companies don't even list data on their accounting statements along with other intangible assets such as trademarks or copyrights.
"I have yet to see a client that has an accounting statement that reflects data that's not a data company," she said.
Companies may still be murky on the value of their data even as the CCPA's Wednesday enforcement data looms closer. Leipzig believes that many businesses were hopeful that the California Attorney General's Office would take into account the comments and feedback rendered by various trade groups and associations citing the novelty of the financial incentives requirement and asking for more time to comply.
So far, those hopes have gone unfulfilled and assembling data valuations from scratch likely isn't a project that can be accomplished in just a few days. Outside of the legal counsel businesses might be accustomed to working with on matters of CCPA compliance, Leipzig recommended that companies also engage the services of a third-party accountant to validate their valuation methodology.
"Initially, I would be surprised if you saw a lot of companies with actual dollar amounts in their valuations. I think what you'll see is an attempt to explain how data will be valued. And we think that's a sufficient explanation to start getting a handle on this in this evolving area," Leipzig said.
But exactly how much legal jeopardy an organization could face if it did come under regulatory scrutiny is unclear. Crowell & Moring's Vanto pointed out that given the variety of business interests at play that can impact the price or availability of a service, it may be difficult for the California attorney general to prove that a company discriminated against consumers who exercised privacy rights.
Still, he did raise the possibility of class action lawsuits centered around data valuations. "Inevitably, whatever dollar figure you come up with is going to be litigated at some point," Vanto said.
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