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  • District Court says retailer not an intended third-party beneficiary of a credit card arbitration provision

    Courts

    On July 8, the U.S. District Court for the Central District of California denied a retailer’s motion to compel arbitration in a consumer data sharing putative class action, ruling that the retailer was not an intended third-party beneficiary of an arbitration provision in a credit card agreement. The proposed class had filed an amended complaint accusing several national retailers of illegally sharing consumer transaction data in violation of the FCRA, the California Consumer Privacy Act, and California’s unfair competition law, among others. The motion at issue, filed by one of the retailers, addresses a named plaintiff’s opposition to compel arbitration. The retailer argued that as an “intended” third-party beneficiary of the contract, it had the right to enforce an arbitration clause contained in a credit card agreement purportedly signed by the plaintiff when she opened a retailer credit card account issued by an online bank.

    The court disagreed, finding that the contract’s arbitration provisions specifically referred to the bank, and that the contract did not clearly “express an intention to confer a separate and distinct benefit on [the retailer].” Moreover, the court noted the contract at issue instructed the plaintiff to send any arbitration demand notices to the bank, adding that “[i]t seems unlikely that the parties would expect a demand for arbitration solely against the [retailer]—that does not involve [the bank]—to be sent to [the bank].”

    Courts Arbitration Third-Party Credit Cards Class Action State Issues CCPA FCRA Privacy/Cyber Risk & Data Security

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  • District Court approves online marketplace data breach settlement

    Courts

    On May 13, the U.S. District Court for the Northern District California preliminarily approved a class action settlement, resolving allegations that a California-based online designer marketplace failed to protect customers’ personal information from a computer hacking group in a May 2020 data breach. The plaintiffs asserted negligence and brought claims under California’s Consumer Privacy Act and Unfair Competition Law after plaintiffs launched an investigation into the cybersecurity incident. The preliminary settlement requires the company to establish a $5 million settlement fund, which would “provide for an estimated $43 payment per participating class member, two years of credit monitoring, and identity restoration services.” The company must also implement several business practice changes to enhance security, including enhancing password protection and implementing a policy regarding minimizing the retention of customers’ personally identifiable information. The settlement also notes that “members subject to identity theft can also obtain fraud resolution assistance to dispute transactions, mediate calls with merchants, and implement fraud alerts.” Class members who do not agree to the settlement may opt out of the settlement by September 16.

    Courts Data Breach Settlement Privacy/Cyber Risk & Data Security Class Action CCPA State Issues

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  • California again modifies CCPA regs; appoints privacy agency’s board

    State Issues

    On March 15, the California attorney general announced approval of additional regulations implementing the California Consumer Privacy Act (CCPA). The CCPA—enacted in June 2018 (covered by a Buckley Special Alert) and amended several times—became effective January 1, 2020. According to the announcement, the newly-approved amendments strengthen the language of CCPA regulations approved by OAL last August (covered by InfoBytes here). Specifically, the new amendments:

    • Require businesses selling personal information collected in the course of interacting with consumers offline to provide consumers about their right to opt out via offline communications. Consumers must also be provided instructions on how to submit opt-out requests.
    • Provide an opt-out icon for businesses to use in addition to posting a notice of right to opt-out. The amendments note that the opt-out icon may not be used in lieu of requirements to post opt-out notices or “do not sell my personal information” links.
    • Require companies to use opt-out methods that are “easy” for consumers to execute and that require “minimal” steps to opt-out. Specifically, a “business’s process for submitting a request to opt-out shall not require more steps than that business’s process for a consumer to opt-in to the sale of personal information after having previously opted out.” Additionally, except as otherwise permitted by the regulations, companies are prohibited from requiring consumers to provide unnecessary personal information to implement an opt-out request, and may not require consumers to click through or listen to reasons as to why they should not submit an opt-out request. The amendments also state that businesses cannot require consumers “to search or scroll through the text of a privacy policy or similar document or webpage to locate the mechanism for submitting a request to opt-out.”

    The AG’s press release also notes that the California Privacy Rights Act (CPRA), which was approved by voters last November and sought to amend the CCPA, will transfer some of the AG’s responsibilities to the California Privacy Protection Agency (CPPA), covered by InfoBytes here; however, the AG will retain the authority to go to court to enforce the law. Enforcement of the CPRA will begin in 2023.

    Additionally, on March 17, the California governor announced appointments to the five-member inaugural board for the CPPA, consisting of experts in privacy, technology, and consumer rights. The CPPA is tasked with protecting the privacy rights of consumers over their personal information, and “will have full administrative power, authority, and jurisdiction to implement and enforce” the CCPA and the CPRA, including bringing enforcement actions before an administrative law judge.

    State Issues State Regulators CCPA State Attorney General Privacy/Cyber Risk & Data Security CPRA CPPA Consumer Protection

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  • Court dismisses data breach claims citing lack of compromised sensitive information

    Privacy, Cyber Risk & Data Security

    On January 12, the U.S. District Court for the Central District of California dismissed a data breach lawsuit brought against a hotel chain, ruling the plaintiff lacked standing. The plaintiff claimed class members were victims of a data breach when hotel employees at a franchise in Russia allegedly accessed personal information without authorization, including guests’ names, addresses, phone numbers, email addresses, genders, birth dates and loyalty account numbers. The plaintiff’s suit alleged, among other things, violations of the California Consumer Privacy Act and the state’s Unfair Competition Law. While the hotel disclosed the incident last March and admitted that class members’ personal information was compromised, the court determined that the plaintiff lacked standing to bring claims after the hotel’s investigation found that “no sensitive information, such as social security numbers, credit card information, or passwords, was compromised.” The court determined that the plaintiff failed to plausibly plead that any of the class members’ more sensitive data had fallen into the wrong hands, and that “[w]ithout a breach of this type of sensitive information, Plaintiff has not suffered an injury in fact and cannot meet the constitutional requirements of standing.”

    Privacy/Cyber Risk & Data Security Courts Data Breach CCPA State Issues

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  • Court grants preliminary approval of CCPA class action settlement

    Courts

    On December 29, the U.S. District Court for the Northern District of California granted preliminary approval of a proposed settlement in a class action alleging a children’s clothing company and cloud technology service provider (collectively, “defendants”) violated, among other things, the California Consumer Privacy Act (CCPA) after suffering a data breach and potentially exposing customers’ personal information (PII) used to purchase products from the company’s website. After the company issued a notice of the security incident in January 2020, the plaintiffs filed the class action alleging the company failed to (i) “adequately protect its users’ PII”; (ii) “warn users of its inadequate information security practices”; and (iii) “effectively monitor [the company]’s website and ecommerce platform for security vulnerabilities and incidents.”

    After mediation, the plaintiffs filed an unopposed motion for preliminary approval of class action settlement, which provides for a $400,000 settlement fund to cover approximately 200,000 class members who made purchases through the company’s website from September 16, 2019 to November 11, 2019. Class members have the option of claiming a cash payment of up to $500 for a Basic Award or of up to $5,000 for a Reimbursement Award, with amounts increasing or decreasing pro rata based on the number of claimants. Additionally, the company agreed to certain business practice changes, including conducting a risk assessment of its data assets and environment and enabling multi-factor authentication for all cloud services accounts. When granting preliminary approval, the court concluded that the agreement does “not improperly grant preferential treatment to any individual or segment of the Settlement Class and fall[s] within the range of possible approval as fair, reasonable, and adequate.”

    Courts CCPA State Legislation Privacy/Cyber Risk & Data Security Data Breach Class Action State Issues

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  • California proposes modifying CCPA regs again

    State Issues

    On December 10, the California Department of Justice (Department) released a fourth set of proposed modifications to the regulations implementing the California Consumer Privacy Act (CCPA). As previously covered by InfoBytes, on October 12, the Department released a third set of proposed modifications to the regulations that went into effect on August 14. The Department noted that it received around 20 comments in response to the third set of proposed modifications and the fourth set of proposed modifications is to address those comments and/or to clarify and conform the proposed regulations to existing law. Highlights of the proposed modifications include:

    • Amending Section 999.306, subd. (b)(3), to clarify that a business that sells (previously proposed as “collects”) personal information collected from consumers in the course of interacting with them offline shall inform consumers of their right to opt-out of the sale of their personal information by an offline method.
    • The addition of Section 999.315, subd. (f), which identifies a uniform “opt-out button” to be used in addition to posting the notice of right to opt-out or used in conjunction with a  “Do Not Sell My Personal Information” link.

    Additionally, the Department provided notice that it added new documents and information to the rulemaking file, which was relied upon when adopting the proposed regulations.

    Comments on the proposed modifications are due on December 28 by 5:00 p.m.

    State Issues CCPA State Attorney General Consumer Protection Privacy/Cyber Risk & Data Security

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  • California voters approve expanded privacy rights

    Privacy, Cyber Risk & Data Security

    On November 3, California voters approved a ballot initiative, the California Privacy Rights Act of 2020 (CPRA), that expands on the California Consumer Privacy Act (CCPA). While there are a number of differences between the CPRA and the CCPA, some key provisions include:

    • Adding expanded consumer rights, including the right to correction and the right to limit sharing of personal information for cross-context behavioral advertising, whether or not for monetary or other valuable consideration.
    • Changing the definitions of various entities, including increasing the numerical threshold for being a business to 100,000 from 50,000 consumers and households and removing devices from this threshold.
    • Adding the category of sensitive personal information that is subject to specific rights.
    • Creating a new privacy agency, the California Privacy Protection Agency, to administer, implement, and enforce the CPRA.

    It is important to note that the Gramm-Leach-Bliley Act and Fair Credit Reporting Act exemptions are in the CPRA, and the act extends the employee and business-to-business exemption to January 1, 2023.

    Implementation deadlines

    The CPRA becomes effective January 1, 2023, with enforcement delayed until July 1, 2023. However, the CPRA contains a look-back provision (i.e., the CPRA will apply to personal information collected by a business on or after January 1, 2022). The new privacy agency also is required to begin drafting regulations starting on July 1, 2021, with final regulations to be completed one year later.

    Learn more

    Please refer to a Buckley article for further information on the differences between the CCPA and the CPRA: 6 Key Ways the California Privacy Rights Act of 2020 Would Revise the CCPA (Corporate Compliance Insights), as well a continuing InfoBytes coverage here.

    Privacy/Cyber Risk & Data Security CCPA CPRA California Consumer Protection Ballot Initiative

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  • California modifying CCPA regs again

    State Issues

    On October 12, the California Department of Justice released a third set of proposed modifications to the regulations implementing the California Consumer Privacy Act (CCPA). As previously covered by InfoBytes, on August 14, the regulations went into effect after being approved by the Office of Administrative Law (OAL). Highlights of the proposed modifications include:

    • The addition of Section 999.306, subd. (b)(3), which provides illustrative examples of the methods businesses can use to provide the notice of right to opt-out of the sale of personal information through an offline method, when the business collects personal information in the course of interacting with consumers offline. Examples include: posting signage in the area where personal information is collected or providing the notice orally during calls where information is collected;
    • The addition of Section 999.315, subd. (h), which provides illustrative examples of right to opt-out methods that are designed with the purpose or have the substantial effect of subverting or impairing a consumer’s choice to opt-out. Examples include: using double negatives or requiring consumers to click through a list of reasons why they should not opt-out before confirming their request;
    • Amending Section 999.326, subd. (a), which clarifies what proof a business may require from an authorized agent and consumer when a consumer uses an agent to submit a request to know or a request to delete; and
    • Amending Section 999.332, subd. (a), which clarifies that businesses subject to § 999.330 (consumers under 13 years of age) and/or § 999.331 (consumers 13 to 15 years of age) must include a description of the processes set forth in those section in its privacy policy for consumers under 16 years of age.

    Comments on the proposed modifications are due on October 28 by 5:00 p.m.

    State Issues Privacy/Cyber Risk & Data Security CCPA State Attorney General Consumer Protection

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  • Certain business and employment CCPA exemptions extended to 2022

    State Issues

    On September 29, the California governor signed AB 1281, which extends certain exemptions under the California Consumer Privacy Act (CCPA) from January 1, 2021 to January 1, 2022. As previously covered by InfoBytes, the CCPA—enacted in June 2018 (covered by a Buckley Special Alert) and amended several times—became effective January 1, and provides consumers several rights regarding their personal information that is held by a business. Specifically, the exemptions at issue in AB 1281 apply to “information collected by a business about a natural person in the course of the natural person acting as a job applicant, employee, owner, director, officer, medical staff member, or contractor, as specified.” The exemptions also apply to certain personal information used in communications or transactions between a business and a consumer if the “consumer is a natural person who is acting as an employee, owner, director, officer, or contractor of a company, partnership, sole proprietorship, nonprofit, or government agency and whose communications or transaction with the business occur solely within the context of the business conducting due diligence regarding, or providing or receiving a product or service to or from that company, partnership, sole proprietorship, nonprofit, or government agency.” However, the act will only take effect if a ballot proposition does not pass during the November statewide general election.

    State Issues CCPA Privacy/Cyber Risk & Data Security State Legislation

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  • Final CCPA regulations approved: Overview of changes

    State Issues

    On August 14, the California attorney general announced that the Office of Administrative Law (OAL) approved the final regulations under the California Consumer Privacy Act (CCPA). As previously covered by InfoBytes, the CCPA—enacted in June 2018 (covered by a Buckley Special Alert) and amended several times—became effective January 1. While the regulation package was under review by the OAL, the California attorney general made certain “nonsubstantial changes” and “changes without regulatory effect” to the CCPA regulations, which are outlined here (Buckley created redline available here). Under the OAL’s regulations, changes are considered “nonsubstantial” if they clarify without materially altering the requirements, rights, responsibilities, conditions, or prescriptions contained in the original text. Changes are considered to be “without regulatory effect” if they involve renumbering or relocating a provision, revising structure, syntax, grammar or punctuation, and, subject to certain conditions, making a provision consistent with statute.

     Among others, the following nonsubstantial changes were made to the final regulations:

    • The shorthand phrase “Do Not Sell My Info” was removed from several sections in order for the language to track the statute (i.e. “Do Not Sell My Personal Information”).
    • The requirement in Section 999.308(c)(1)(e) that the identification of sources from which personal information is collected “be described in a manner that provides consumers a meaningful understanding of the information being collected” in the privacy policy has been removed but the categories of sources still must be identified.
    • The severability provision, formerly in Section 999.341 was deleted as unnecessary. This provision previously stated: “If any article, section, subsection, sentence, clause or phrase of these regulations contained in this Chapter is for any reason held to be unconstitutional, contrary to statute, exceeding the authority of the Attorney General, or otherwise inoperative, such decision shall not affect the validity of the remaining portion of these regulations.” (formerly § 999.341).

    Additionally, the following requirements were deleted from the regulations at this time, although the California attorney general has indicated that these provisions may be resubmitted “after further review and possible revisions”:

    • The requirement, formerly in Section 999.305(a)(4), that the business notify and obtain explicit consent from a consumer to use the consumer’s personal information for a purpose materially different than those disclosed in the notice at collection.
    • The requirement, formerly in Section 999.306(b)(2), that a business that substantially interacts with consumers offline must provide a notice to the consumer offline to facilitate their awareness of the right to opt-out.
    • The requirement in Section 999.315(c) that the business’s methods for submitting the request to opt-out must “be easy for consumers to execute” and “require minimal steps to allow the consumer to opt-out.”
    • The provision, formerly in Section 999.326(c), permitting a business to deny a request from an authorized agent if the agent fails to submit proof of authorization from the consumer.

    The final regulations became effective on August 14, 2020.

    State Issues State Attorney General CCPA Regulation Consumer Protection Privacy/Cyber Risk & Data Security

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