Important Reminder: Comply with Data Broker Registration Laws to Avoid Fines
As consumer data privacy continues to take center stage, businesses involved in data collection and sale must be vigilant in adhering to state-specific registration laws. For example, the California Privacy Protection Agency (“CPPA”) has been actively enforcing compliance with the state’s Delete Act, which went into effect on January 1, 2023, and includes specific requirements for data brokers. This serves as a crucial reminder that companies failing to meet these registration obligations can face significant penalties.
The Delete Act is part of the broader California Consumer Privacy Act (“CCPA”) and imposes several key regulations for businesses that qualify as “data brokers.” The law defines a data broker as any business that collects and sells consumer personal information to third parties, provided the business does not have a direct relationship with the consumer. This includes not only selling consumer data but also activities like renting, disclosing, or transferring it for monetary or other valuable considerations.
One of the central provisions of the Delete Act is the requirement for data brokers to register annually with the CPPA and pay the necessary fees to support the California Data Broker Registry. This registry plays an important role in maintaining transparency around data broker practices and allows consumers to make more informed decisions about their data. If a business falls under the definition of a data broker but fails to register, it could face a fine of $200 per day, along with additional costs for the CPPA’s legal fees.
In fact, the CPPA’s active efforts to enforce these laws were demonstrated recently when it settled with two companies, Growbots, Inc. and UpLead LLC, for failing to register under the Delete Act. This was part of a broader sweep by the CPPA to ensure compliance. Both companies were fined for not adhering to the data broker registration and annual fee requirements, with Growbots paying $35,400 and UpLead $34,400. These settlements highlight the agency’s commitment to cracking down on violations.
However, California isn’t alone in regulating data broker activities. Other states like Texas and Vermont have also put their own registration laws in place, each with their own specific requirements and penalties. For instance, Texas mandates that data brokers register with the Secretary of State and pay a $300 fee. Violating these requirements can lead to fines of $100 per day, with a cap of $10,000 per year. Additionally, violating data protection provisions under Texas law could expose businesses to deceptive trade practice claims, with penalties reaching up to $10,000 per violation.
Vermont’s law similarly requires registration with the Attorney General and an annual fee of $100. Violations are treated as unfair and deceptive practices under Vermont’s consumer protection law, carrying similar penalties for non-compliance.
For businesses operating as data brokers, it is more important than ever to stay ahead of the curve and ensure compliance with both current and emerging data broker registration laws. As states continue to enact similar regulations, it’s crucial to consult with legal experts to navigate these complex requirements and avoid the costly fines associated with non-compliance.
The ongoing regulatory push signals that authorities are taking consumer data privacy seriously, and businesses must do the same. By staying informed and proactive, you can safeguard your operations against penalties while helping to ensure the responsible handling of consumer data.
Explore our comprehensive CLIClaw Data Broker Compliance Library for essential resources and step-by-step guidance to ensure your business is fully compliant.
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This article is for information purposes only. It is not intended to be and should not be relied on as legal advice for any particular matter.