On March 2nd, Governor Ralph Northam signed into law the Consumer Data Protection Act (“CDPA”), making Virginia the second state to enact comprehensive data privacy legislation. The new law, which will go into effect on January 1, 2023, combines concepts from the California Consumer Privacy Act (“CCPA”) and California Privacy Rights Act (“CPRA”), as well as Europe’s General Data Protection Regulation (“GDPR”). The CDPA grants numerous rights to residents of the Commonwealth to provide them with greater control over their personal data, and places new obligations upon covered businesses. Specifically, the law gives Virginia residents (“consumers”) the right to access, correct, delete, and obtain a copy of their personal data, as well as the right to opt out of the sale or processing of their personal data by covered businesses for purposes of “targeted advertising.”[1] The CDPA broadly defines “personal data” as “any information that is linked or reasonably linkable to an identified or identifiable natural person,” and excludes de-identified data or publicly available information. Virginia’s new law also creates a special sub-category for “sensitive data” that includes: “(1) personal data revealing racial or ethnic origin, religious beliefs, mental or physical health diagnosis, sexual orientation, or citizenship or immigration status; (2) the processing of genetic or biometric data for the purpose of uniquely identifying a natural person; (3) the personal data collected from a known child; or (4) precise geolocation data.”
Who is Covered?
The CDPA applies to businesses, whether physically located in Virginia or not, that conduct business in or target residents of the Commonwealth, and that either: (1) control or process the personal data of at least 100,000 consumers, or (2) derive over 50 percent of their gross revenue from the sale of personal data and control or process the personal data of at least 25,000 consumers. In addition to excluding small business from its scope, Virginia’s law includes several other exemptions and provisions making it generally more business-friendly than Europe’s and California’s laws. For example, the CDPA excludes non-profit organizations and institutions of higher education, as well as businesses that meet the above thresholds but are already subject to federal privacy laws such as the Gramm-Leach-Bliley Act and HIPPA.[2] The law also defines “consumer” as “a natural person who is a resident of the Commonwealth acting only in an individual or household context. It does not include a natural person acting in a commercial or employment context.” While California passed temporary business-to-business (“B2B”) and employment-related exemptions to lessen the burden of businesses’ compliance with the CCPA, the Virginia law considers and includes built-in exceptions for these types of personal data.
Requirements for Covered Businesses
Businesses subject to the provisions of the CDPA will need to develop processes to allow consumers to exercise the above-mentioned rights. Covered businesses should also prepare to comply with the following obligations under the new law:
- The requirement that covered businesses provide a reasonably accessible, clear, and meaningful privacy notice (often referred to as a “privacy policy”) that includes specific information as outlined by the law.
- The requirement that covered businesses considered “controllers” put contracts in place with third party “processors” of personal data containing specific provisions related to the handling of consumers’ personal data.[3] Thus, businesses subject to the CDPA should adopt standard contractual language to include in any agreements with vendors that will touch personal data.
- The requirement that covered businesses limit the collection of personal data to what is “adequate, relevant, and reasonably necessary in relation to the purposes for which such data is processed, as disclosed to the consumer,” and that such businesses “establish, implement, and maintain reasonable administrative, technical, and physical data security practices to protect the confidentiality, integrity, and accessibility of personal data.”[4]
- The requirement that covered businesses conduct and document a formal “data protection assessment.” The assessment must include specific information related to businesses’ processing of personal data. The Office of Attorney General may request a copy of a business’s data protection assessment under its investigative authority (which, for example, is likely to occur during its investigation into a covered business’s data breach).
- The requirement that covered businesses obtain affirmative consent from consumers before collecting and using “sensitive data.” Because affirmative consent is not currently required under California’s data privacy laws, many covered businesses will likely need to consider how they will obtain such consent and if/why they are processing sensitive data, specifically.
Enforcement
The CDPA will be enforced by Virginia’s Office of the Attorney General, which will have investigative authority and may seek injunctions and/or impose civil penalties of up to $7,500 per infraction for covered businesses that violate the law. Any penalties and fees collected will go into a “Consumer Privacy Fund” used to support the work of the Office of the Attorney General to enforce the provisions of the CDPA. Like the CCPA, Virginia’s new law also provides for a 30-day cure period for violations. However, quite notably and unlike the CCPA, the CDPA does not include any private right of action. Further, while the Virginia law does not contain language regarding rulemaking authority or procedures, it creates a “work group” to review the CDPA and issues related to its implementation.[5] The work group’s findings, best practices, and recommendations regarding the implementation of the CDPA shall be submitted to the Chairmen of the Senate Committee on General Laws and Technology and the House Committee on Communications, Technology and Innovation no later than November 1, 2021.
Generally, the CDPA avoids several areas of uncertainty that lawmakers and California’s Attorney General, as well as covered businesses seeking to comply, encountered during the rollout of the CCPA. Thus, Virginia’s law may provide a clearer model for consumers and businesses to follow, as well as for other states and possibly the federal government when developing their own data privacy legislation. Gavin Law Offices, PLC will continue to monitor updates regarding the CDPA and other U.S. data privacy laws.
(This blog post is not intended as legal advice. Please contact us for more information and assistance regarding your particular situation.)
[1] “Targeted advertising” means displaying advertisements to a consumer where the advertisement is selected based on personal data obtained from that consumer’s activities over time and across nonaffiliated websites or online applications to predict such consumer’s preferences or interests. “Targeted advertising” does not include: (1) Advertisements based on activities within a controller’s own websites or online applications; (2) Advertisements based on the context of a consumer’s current search query, visit to a website, or online application; (3) Advertisements directed to a consumer in response to the consumer’s request for information or feedback; or (4) Processing personal data processed solely for measuring or reporting advertising performance, reach, or frequency.
[2] This language is considerably more favorable for businesses than a similar exception under the CCPA, which applies to only “personal information” collected, processed, sold, or disclosed pursuant to a specified federal law such as GLBA or HIPPA, and does not exclude the entity as a whole like the new Virginia law.
[3] Under the CDPA, “controller” means the natural or legal person that, alone or jointly with others, determines the purpose and means of processing personal data. Meanwhile, “processor” means a natural or legal entity that processes personal data on behalf of a controller. Both terms will be familiar to those acquainted with data privacy legislation, as they are borrowed from the GDPR.
[4] This “reasonable” safeguard standard is also included in the CCPA/CPRA and the GDPR. The CDPA also includes language that “such data security practices shall be appropriate to the volume and nature of the personal data at issue.” Thus, like existing data privacy law, Virginia’s will allow businesses to determine their own “reasonable” security practices and does not obligate covered businesses to put in place any specific data security measures.
[5] Specifically, the “Chairman of the Joint Commission on Technology and Science shall create a work group composed of the Secretary of Commerce and Trade, the Secretary of Administration, the Attorney General, the Chairman of the Senate Committee on Transportation, representatives of businesses who control or process personal data of at least 100,000 persons, and consumer rights advocates.” Interestingly, this does not include representatives of businesses who derive over 50 percent of their gross revenue from the sale of personal data and control or process the personal data of at least 25,000 consumers.
– Courtney Reigel, Esq.
