The FTC recently issued a proposed order that would settle an enforcement action against Drizly, LLC and its co-founder and CEO, James Rellas, arising from data breaches in 2018 and 2020 that affected over 2.5 million customers. The FTC’s proposed order is unusual in that applies to Rellas personally. The order requires Rellas to implement various data security practices at any company he owns or oversees in the next decade, even if Rellas moves to a company unrelated to Drizly.

Let’s take a look at the data security breaches that led to the FTC’s enforcement action and some of the key takeaways that result from the FTC’s unusual proposed order. Continue Reading Cybersecurity Regulation: Key Takeaways From an Unusual FTC Order That Will Follow CEO for a Decade

Governor Newsom recently signed into law AB 2273, the California Age-Appropriate Design Code Act (CA AADCA), making California the first state to pass broad privacy protections for children.

The CA AADCA is modeled after the UK’s Age-Appropriate Design Code (UK AADCA) which came into effect last year. While the two acts are not identical, businesses that conformed to the UK AADCA will see many similarities with the CA AADCA. Both laws seek to provide higher default privacy protections for children and set forth various requirements for covered businesses. Continue Reading California Passes Landmark Privacy Protections for Children With Big Implications for Online Providers

On October 5, 2022, after a monthlong jury trial, former Uber Chief Information Security Officer Joseph Sullivan was found guilty of obstructing proceedings of the Federal Trade Commission (FTC) and misprision of a felony related to failure to disclose two data breaches in 2014 and 2016. Sullivan remains on bond pending his sentencing, where he faces a maximum sentence of five years for the obstruction charge and three years for the misprision charge.

Sullivan was hired by Uber in 2015 and handled the company’s response to the FTC regarding the 2014 breach. Sullivan supervised Uber’s responses to the FTC, testified under oath to the committee regarding the company’s data protections, and supported a preliminary settlement entered into by Uber and the FTC in the summer of 2016.

However, shortly after Sullivan’s testimony in 2016, Uber fell victim to another cyber-attack. Continue Reading Uber’s Former Chief Security Officer Found Guilty of Obstruction for Coverup of Data Breaches

Since the California Consumer Privacy Act (“CCPA”) was passed in 2018, employers have been watching carefully to see how the law will apply to data collected and maintained about their employees. Up until now, employment data had been exempted from most of the CCPA’s requirements. But the new amendments to the CCPA embodied in the California Privacy Rights Act (“CPRA”) come into effect on January 1, 2023, and that, coupled with the fact that the legislature failed to extend the employer exemptions, means that many categories of human resources data will be subject to the requirements of the law.[1]

The Current CCPA Employer Exemptions Are Expiring

As it stands (and through the end of 2022), covered employers are only obligated to notify employees of the categories of data being collected and the purposes for which the data will be used. In the event of a security breach involving employee data, employers are required to notify affected individuals and could be liable for statutory damages. In response to these requirements, most covered employers developed privacy notices with the required disclosures and reviewed their data security policies and protocols to ensure consistency with best practices.

But starting in 2023, employee data will be treated as any other commercial information, and covered employers will need to add employee and human resources data to their ongoing compliance efforts. Indeed, under the CCPA, “personal information” is defined broadly to include information that “identifies, relates to, describes, is reasonably associated with, or could reasonably be linked, directly or indirectly, with a particular consumer household.” Cal. Civ. Code § 1798.140(o)(1). In the employee or human resources context, personal information could include an employee’s contact information, insurance and benefits elections, bank and direct deposit information, emergency contacts, dependents, resume and employment history, performance evaluations, wage statements, time punch records, stock and equity grants, compensation history, and many other forms of data routinely collected in the context of the employment relationship. Moreover, the CPRA introduces a new concept of “sensitive personal information” (such as financial information, social security numbers, communications content, health information, and biometrics) that must be considered and addressed by the employer.

New Requirements Take Effect in 2023

So what does this mean for employers? First, employers must prepare and provide a privacy notice to an employee (or a job applicant since such applicant is likely providing personal information) at or before the time personal information is collected. This could mean including a privacy policy (and a click-through mechanism) on any online application site, in the employee handbook, and/or on internal websites. The privacy policy is likely to be similar to the online privacy policy the employer includes for consumers, though it will need to be revised to accurately reflect the categories of personal information collected (along with the length of time the employer intends to retain data in each category), as well as the categories of third parties with whom such information will be shared (e.g., payroll service providers, etc.). Continue Reading Employee Data Under the CCPA: Expiration of Employer Exemptions Requires Compliance as of January 1, 2023

As companies prepare for the provisions of the California Privacy Rights Act (“CPRA”) to come into effect in January 2023, California Office of Attorney General (“OAG”) has signaled that companies should not wait to start complying with the Global Privacy Control (“GPC”). A recent lawsuit and subsequent $1.2 million settlement by the OAG against French e-commerce company Sephora, Inc. that targeted compliance with the GPC. In announcing the settlement, the OAG also made it known that it had “also sent notices today to a number of businesses alleging non-compliance relating to their failure to process consumer opt-out requests made via user-enabled global privacy controls, like the GPC” because, “[u]nder the CCPA, businesses must treat opt-out requests made by user-enabled global privacy controls the same as requests made by users who have clicked the ‘Do Not Sell My Personal Information’ link.” In other words, the OAG is taking the position that the California Consumer Privacy Act (“CCPA”) already requires implementation of the GPC. Continue Reading California AG Signals Enforcement of the Global Privacy Control Under the CCPA

Earlier this year, a number of individuals brought a lawsuit in the United States District Court for the Western District of Washington against Washington-based company Wyze Labs, Inc (Wyze), which manufactures “smart” home cameras and security equipment. See In re: Wyze Data Incident Litigation, Case No. C20-0282-JCC (W.D. Wa. 2020). The lawsuit – which centered around a 2019 data breach incident – alleged that Wyze failed to comply with Federal Trade Commission requirements for safeguarding users’ personal information. Continue Reading Arbitration Agreements in Privacy Disputes: The Wyze Decision and the CCPA

During these particularly trying times resulting from the COVID-19 pandemic, businesses of all sizes have been concerned about the future. As a result, considering potential liquidation or restructuring through bankruptcy is inevitably starting to become a reality for some. Companies in this situation should keep privacy concerns in mind, because the handling of personal data in bankruptcy proceedings poses some unique challenges.

By taking proactive measures, a business can transform the personal data it holds from a reorganization liability into an asset. However, the issue of whether or not personally identifiable information (PII) can be sold (and under what terms) is a common way privacy issues come into play during liquidation and reorganization proceedings. As further discussed below, the GDPR and the CCPA, along with the prior positions taken by the FTC and various State Attorneys General, are all factors for companies to consider to ensure that data does not lose its value as part of the bankruptcy process. Continue Reading Privacy During Bankruptcy Proceedings: Why It Matters

With a little time to consider the finalized California Consumer Privacy Act regulations released by the California Attorney General on August 14, 2020, it is clear that some last-minute negotiations (or perhaps just some thoughtful additional analysis) took place that led to some unexpected changes. The lion’s share of the regulation requirements have been discussed in depth, so let’s just focus on the following noteworthy changes: Continue Reading Twists in the Plot: California AG Releases Final CCPA Regulations

A few weeks ago on this blog, we addressed some of the legal issues that have arisen for Zoom, as it becomes a significant part of American daily life during the COVID-19 pandemic.

Among those legal issues was an inquiry by the New York State Attorney General into Zoom’s privacy practices, and particularly into its measures to detect and prevent hackers or other outside parties attempting to observe or interfere with online meetings. In several incidents, the third parties interrupted meetings with disturbing messages or images. In fact, two other states – Connecticut and Florida – joined the New York probe after state government officials fell victim to “zoombombing.” Based on perceived security flaws, on April 6, 2020, the New York City Department of Education implemented a ban on public schools’ use of Zoom for classes and educational purposes. Continue Reading Zoom Successfully Addresses New York’s Privacy and Security Concerns

As privacy-related litigation continues to heat up, Judge Beth Freeman (ND Cal.) recently laid out in In re Google Assistant Privacy Litigation (Case No. 19-cv-04286)[1] a potential roadmap for surviving or winning a motion to dismiss on privacy-related causes of action.

The consolidated lawsuit against Google alleges violations on twelve counts, all relating to the Google Assistant product – a voice-activated technology used in mobile and home devices that listens for “hotwords” in order to carry out user commands. This case is an important one to watch and should be broadly instructive as many companies, big and small, are and have been hard at work on voice-activated technologies (compare, for instance, to Amazon’s Alexa, Apple’s Siri, and countless speech recognition start-ups around the world). Huge numbers of households and individuals currently have these devices in their homes and/or on their person at all times. Continue Reading A Roadmap to Litigating Privacy Claims? A Look at a Recent Order From the Google Assistant Privacy Litigation