There has been an increase in privacy violations that have led to class action lawsuits. For example, Facebook was forced to pay $550 million to settle a class action lawsuit for privacy violations. In that case, it was ordered to pay the plaintiffs due to an alleged systematic violation of an Illinois consumer privacy law. The settlement agreement included a provision that required Facebook to procure express consent for face analysis and auto-tagging its users. There have been other lawsuits filed against technology companies, such as, Shutterfly, Snapchat, and Google for similar violations.
The California Consumer Privacy Act (“CCPA”) gives consumers the right to request information from a business about its data collection and retention practices. The consumers have the right to know if the business is using their data to make inferences from their behavior, attitude, psychology, intelligence, or abilities. This statute grants consumers the right to request a data deletion. It gives the consumers an “opt-out option” from selling their data to third parties. However, the statute is not retroactive which means that it does not apply to violations that took place before implementing the law.
A putative class action lawsuit was filed against Hanna Andersson, LLC and Salesforce.com for their alleged failure to maintain reasonable safeguards that led to a data breach. The complaint alleges that a group of hackers infiltrated the defendants’ websites with malware allowing them to extract personal information. Under Civil Code § 1798.150, a consumer is permitted to file a lawsuit if he or she can prove the business failed to implement reasonable safeguards to protect personal information. Then, if the plaintiff overcomes the applicable burden of proof, then he or she may be entitled to a minimum of $100 or maximum of $750 per consumer per incident, or actual damages, whichever is greater, as well as injunctive relief. However, there is a provision which requires giving the business an opportunity to cure the violation. In other words, the consumer must initially inform the business of the violation and grant at least 30 days to cure the violation. The business must provide a written statement that confirms the violation has been cured and no other violation will take place. Yet, the statute does not yield a safe harbor clause for the business against consumers who are seeking actual damages.
What duties does a business have towards its customers in this context?
Well, under Civil Code 1798.81.5(b), “a business that owns, licenses, or maintains personal information about a California resident shall implement and maintain reasonable security procedures and practices appropriate to the nature of the information, to protect the personal information from unauthorized access, destruction, use, modification, or disclosure.” Moreover, a business must ensure third parties that it has contractual relations with, implement and maintain reasonable security procedures and practices.
The consumers have a private right of action which means they can initiate a legal action on their own behalf. In fact, the private right of action is applicable to personal information of consumers, employees, applicants, and officers which covers a wider scope. It’s imperative for businesses to understand that personal information resides on multiple levels and can be transferred to various individuals or entities. Therefore, business owners should fully appreciate the data flow process to properly safeguard personal information.
We work with clients regarding business, internet, and technology laws. Please feel free to contact our law firm to speak with an attorney who has knowledge about class actions and privacy laws.