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Financial Services Law Insights and Observations

California clarifies that internally generated inferences are “personal information” under the CCPA

Privacy/Cyber Risk & Data Security State Issues State Attorney General California CCPA CPRA

Privacy, Cyber Risk & Data Security

On March 10, the California Office of the Attorney General (OAG) issued an opinion on the question of whether, under the California Consumer Privacy Act (CCPA), a consumer’s right to know the specific pieces of personal information collected by a covered business about that consumer applies to internally generated inferences that the business holds about the consumer from either internal or external information sources. According to the OAG, the answer is yes—consumers have the right to know internally generated inferences about themselves, and a business must provide such information upon request, unless a business can demonstrate an applicable CCPA statutory exception. The CCPA, which was enacted in June 2018 and became effective January 1, 2020 (covered by a Buckley Special Alert), provides California consumers with new rights of control over the personal information held about them (with certain exceptions), including the right to know what information is being collected and how a business uses and shares that information, the right to delete personal information, and the right to opt out of certain transfers and sales of their personal information. The OAG noted that while the Consumer Privacy Rights Act of 2020 will become fully operative January 1, 2023, none of the act’s amendments to the CCPA will change the conclusions presented in the opinion.

The OAG’s opinion defines “inference” under the CCPA to mean “the derivation of information, data, assumptions, or conclusions from facts, evidence, or another source of information or data.” Example inferences such as “married,” “homeowner,” “online shopper,” or “likely voter,” the OAG explained, are derived from information collected by businesses such as online transactions, social network posts, or public records. OAG noted that some businesses also use proprietary methods to create inferences and “then sell or transfer the inferences to others for commercial purposes,” thus allowing, according to studies, “seemingly innocuous data points” to be combined with other data points “to deduce startlingly personal characteristics.” According to the OAG’s interpretation of the plain language of the CCPA, as well as legislative history, businesses are generally required “to disclose internally generated inferences to consumers” “regardless of whether the inferences were generated internally by the responding business or obtained by the responding business from another source.”

The OAG further explained that, inferences are “personal information” for purposes of the CCPA, and therefore must be disclosed provided two conditions exist: (i) “the inference is drawn ‘from any of the information identified”’ in subdivision (o) of Civil Code section 1798.140, which includes, among other things, personal identifiers such as names, addresses, account numbers, or identification numbers, customer records, age, gender, race, or religion, as well as inferences obtained from any of the provided items; and (ii) “the inference is used to ‘create a profile about a consumer,’ or in other words to predict a salient consumer characteristic.” For the purposes of responding to a consumer’s request to know, the OAG stated that “it does not matter whether the business gathered the information from the consumer, found the information in public repositories, bought the information from a broker, inferred the information through some proprietary process of the business’s own invention, or any combination thereof.” The business is required to disclose the personal information it holds to the consumer upon request. The OAG noted, however, that the CCPA does not require businesses to disclose protected trade secrets used to derive its inferences, provided the business demonstrates “that such inferences are indeed trade secrets under the applicable law.”

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