The BR Privacy & Security Download: March 2022
Welcome to this month's issue of The BR Privacy & Security Download, the digital newsletter of Blank Rome’s Privacy, Security & Data Protection practice. We invite you to share this resource with your colleagues and visit Blank Rome’s Privacy, Security & Data Protection webpage for more information about our team.
STATE & LOCAL LAWS & REGULATIONS
Flurry of State Comprehensive Laws Introduced
States continue to introduce and consider comprehensive privacy laws in their 2022 legislative sessions. Indiana, Oklahoma, and Florida are currently in the running to becoming the fourth state to enact a comprehensive privacy law, after California, Virginia, and Colorado. Indiana’s Senate unanimously passed its privacy bill and the Oklahoma House of Representatives passed the Oklahoma Computer Data Privacy Act. Meanwhile, a Florida comprehensive privacy bill with a private right of action has become eligible for a vote on the house floor. The Wisconsin Assembly greenlit its privacy bill, but it is unclear whether the Wisconsin Legislature will complete its work on the bill before its March deadline for consideration on the floor. The Massachusetts Senate’s Joint Committee on Advanced Information Technology, the Internet and Cybersecurity advanced the Massachusetts Information Privacy and Security Act, the Alaska House of Representatives advanced the Alaska Consumer Data Privacy Act, and the Ohio House Government Oversight Committee advanced its privacy bill. Arizona, Connecticut, Iowa, Maine, and Utah all introduced their respective privacy bills. At least 24 states are now considering comprehensive privacy legislation.
California Legislature Introduces Age-Appropriate Design Code Act
The Age-Appropriate Design Code Act (“AB 2273”) was introduced in the California Assembly. Modeled on the UK’s Age Appropriate Design Code, AB 2273 would require businesses that provide goods, services, or product features that are likely to be accessed by a child under the age of 18 to consider the “best interests of [the child]” when designing, developing, and providing such services and products over the business’ commercial interests. AB 2273 also requires covered businesses to maintain the highest level of privacy possible for children by default and use age-appropriate language in its terms of service and privacy policies and prohibits collecting and retaining such information that is not necessary to provide the business’ products or services. If passed, the law would go into effect on July 1, 2024.
California Legislature Introduces Bills to Extend Employee and B2B Information Exemption under the CCPA/CPRA
Two bills (AB 2871 and AB 2891) were introduced in the California Assembly that propose to extend the exemption for employee and business-to-business (“B2B”) information currently provided under the California Consumer Privacy Act (“CCPA”), as amended by the California Privacy Rights Act (“CPRA”). Currently, personal information collected in the employment and B2B contexts are exempted from the CCPA, except with respect to its private right of action and, for employee information, notice obligations. AB 2871 proposes to extend these exemptions indefinitely, while AB 2891 proposes to extend these exemptions until January 1, 2026. If passed, the bills may be challenged as inconsistent with the purpose and intent of the CPRA. The CPRA was approved as a referendum by California voters and the California Constitution only allows the California Legislature to amend a statute passed by referendum if the statute permits. While the CPRA does so, the CPRA further requires that the amendments be consistent with and further the purpose and intent of the CPRA.
California Legislature Introduces Biometric Privacy Law
The California Legislature introduced a biometric privacy law (“SB 1189”) similar to the Illinois Biometric Information Privacy Act (“BIPA”). SB 1189 would broaden the definition of biometric data under California law to include a person’s physiological, biological, and behavioral characteristics used to establish individual identity. SB 1189 would supplement the CCPA/CPRA, but would cover any “private entity” (“an individual, partnership, corporation, limited liability company, association, or similar group, however organized” but does not include University of California) and requires companies to provide notice to consumers and obtain a consumer’s consent prior to collecting information. Like BIBA, SB 1189 includes a private right of action, which would certainly fuel significant litigation like its BIPA counterpart. If enacted, SB 1189 would go into effect January 1, 2023, potentially putting significant time pressure on companies doing business in California to prepare biometric privacy compliance programs before the end of the year.
CPRA Regulations Delayed
California Privacy Protection Agency (“CPPA”) Executive Director Ashkan Soltani indicated in a CPPA public meeting that formal rulemaking proceedings will continue into the third quarter of 2022 with rulemaking likely to be completed in the third or fourth quarter of 2022. The CPRA provides a deadline of July 1 for regulations to be finalized. With regulations expected to be extensive, companies may have a short time following release of final regulations to adjust compliance programs to account for regulatory requirements. The CPPA made no announcement regarding a delay in enforcement activity as a result of the delayed rulemaking process.
Florida Considers Amendments to Mini-TCPA
Lawmakers in Florida are currently considering legislation to amend the state’s Telephone Solicitation Act (“FTSA”). The Senate bill would change the statute’s definition of an autodialer to be more consistent with the definition under the federal Telephone Consumer Protection Act (“TCPA”), making click-to-dial and human-selection systems permissible. However, a recent amendment to the House bill conflicts with the Senate’s proposed definition and would prohibit the use of such systems. In the absence of clarifying legislation, class action lawsuits under the FTSA, especially ones focusing on text message systems, have continued to pile up. Clients are advised to consult counsel and ensure that there are procedures in place for obtaining prior consent before using any new system to make calls, text messages, or ringless voicemails to persons in Florida. You can read more about Florida’s mini-TCPA statute here.
Oklahoma Introduces Mini-TCPA Legislation
Lawmakers in Oklahoma are currently considering the Telephone Solicitation Act of 2022. The Oklahoma bill mimics Florida’s mini-TCPA law. The Oklahoma bill aligns its definition of an autodialer with the generally accepted interpretation of an autodialer under the federal TCPA as it was before the Supreme Court clarified and substantially narrowed the definition in Facebook, Inc. v. Duguid. The Oklahoma bill recently advanced out of a House committee by a unanimous vote. If passed, the Oklahoma legislation would become effective in November 2022.
Washington and Georgia Consider Changes to “Do Not Call” Laws
Lawmakers in Washington and Georgia are considering changes to their Do Not Call (“DNC”) laws which would increase penalties and make violations enforceable by private litigation. The Washington House of Representatives is reviewing a bill that would amend the state’s Commercial Electronic Mail Act (“CEMA”) by doubling penalties to $1,000 and providing a private right of action. In addition, the bill would redefine the current definition of an automatic dialing and announcing device by making it broader and specifically prohibiting ringless voicemails. In Georgia, a recently passed Senate bill would authorize a private right of action for violation of its DNC law. Moreover, the Georgia bill specifically removes as an affirmative defense that the defendant did not make the call or was not aware that such call was in violation of the statute, if such call was made by a vendor on behalf of the defendant, effectively making businesses liable for rogue callers.
FEDERAL LAWS & REGULATIONS
U.S. Senate Homeland Security Committee Reintroduces Legislation on Reporting Cybersecurity
The U.S. Senate’s Homeland Security Committee re-introduced the Strengthening American Cybersecurity Act of 2022 (“SACA”), which requires critical infrastructure operators to report cybersecurity incidents to the Cybersecurity and Infrastructure Security Agency (“CISA”) no later than 72 hours after the incident is reasonably believe to have occurred and within 24 hours of any ransomware payment being made. Critical infrastructure operators must also continue to submit supplemental written reports with any updates on the incident until the incident has been fully mitigated and resolved. Additionally, SACA attempts to update the cybersecurity guidelines within the Federal Information Security Modernization Act, which has not been amended in seven years. SACA further codifies the General Services Administration’s Federal Risk and Authorization Management Program (“FedRAMP”), which aims to certify the security of cloud products and services used by federal agencies.
Federal Legislation Introduced to Study Modernization of Health Data Privacy Laws
The Health Data Use and Privacy Commission Act was introduced in the U.S. Senate. The Act would establish of a commission in charge of providing recommendations to Congress about updates to health-related privacy laws. The introduction of this Act would consider, among other things, whether laws are needed to regulate health-related apps that allow individuals to create and share health data. The Health Insurance Portability and Accountability Act (“HIPAA”) only covers health data created and maintained by covered entities such as healthcare providers and payers.
SEC Proposes Cybersecurity Rules for Investment Advisers and Funds
The Securities and Exchange Commission (“SEC”) voted to propose rules related to cybersecurity risk management for registered investment advisers, registered investment companies, and business development companies. The proposed rules would require advisers and funds to adopt and implement written cybersecurity policies and procedures, report significant cybersecurity incidents to the SEC, and comply with new recordkeeping requirements designed to improve the availability of cybersecurity related information and facilitate SEC inspection and enforcement. The proposed rule would also require advisers and funds to publicly disclose cybersecurity risks and significant cybersecurity incidents that occurred in their last two fiscal years in their brochures and registration statements.
NIST Seeks Input on Updates to Cybersecurity Framework
The National Institute of Standards and Technology (“NIST”) has issued a request for information to gather information about evaluating and improving resources for the NIST Cybersecurity Framework (“CSF”). The CSF is one of the leading information security frameworks for private sector cybersecurity programs, and NIST’s goal for revising the CSF is to keep the CSF current and align it with other tools that are commonly used in the private sector, including by small companies. Comments to the NIST request for information are due by April 25, 2022.
Illinois Supreme Court Rules BIPA Claims Not Barred by Workers’ Compensation Law
The Illinois Supreme Court ruled that the state’s Workers’ Compensation Act does not preempt statutory damages claims under the BIPA. The Court held that claims for liquidated damages for collection of biometric data in violation of BIPA don’t qualify as a workplace injury that occurred on the job that would be subject to the Workers’ Compensation Act. A significant number of BIPA lawsuits brought by employees against employers had been paused pending the Court’s ruling on the preemption issue. Those cases are now set to proceed. The ruling emphasizes the need for companies that use biometric information in the employment context to put in place a compliance program meeting BIPA requirements or risk significant liability for violations of the law as the flood of BIPA lawsuits continues unabated.
Claims Alleging Wiretap Violations for Website’s Collection of Analytics Dismissed
The U.S. District Court for the District of Delaware dismissed a proposed class action alleging that General Motors’ (“GM”) website had violated the Federal Wiretap Act and the California Invasion of Privacy Act by using third-party software that recorded user mouse and keyboard movements and the date, time, and IP address associated with the user’s interaction with the website. The District Court judge distinguished the case from a case in which Facebook has reached a proposed settlement for $90 million because GM only recorded user information while users were on GM’s own website, no personal information was obtained from users and no allegations were made that GM attempted to sell or monetize the collected information in any way. The court further held that the plaintiffs did not have a reasonable expectation of privacy in the data captured by the software and consequently did not suffer any concrete injury that could support the claims.
Weight Loss Company Reaches $56 Million Settlement
Noom, Inc. agreed to pay $56 million and an additional six million dollars in subscription credits to settle a putative class action in the United States District Court, Southern District of New York, regarding Noom’s trial period and autorenewal billing practices. Noom is a popular subscription-based mobile app for tracking food intake and exercise habits, while encouraging healthy choices for weight loss. The class members alleged that Noom “actively misrepresents and/or fails to accurately disclose the true characteristics of its trial period, its automatic enrollment policy, and the actual steps customer need to follow in attempting to cancel a 14-day trial and avoid automatic enrollment” and that Noom made it difficult for consumers to cancel their subscription before the trial ended, resulting in consumers paying nonrefundable lump sums for up to eight months at a time. Regulators at the state and federal level have been focused on similar “dark patterns” that direct consumers into enrolling for subscriptions or make it difficult to cancel.
Vendor of Employee Biometric Data Collection Tools Settles BIBA Class Action
Kronos, Inc., a provider of time and attendance solutions to employers, agreed to a $15.3 million settlement relating to claims that it violated BIPA by collecting fingerprints for its employer customers’ timekeeping purposes. Plaintiffs alleged that Kronos violated BIPA when its software collected fingerprints through its software without providing notice and obtaining consent from the individual employees. The settlement highlights the risk to vendors with products and services that collect biometric information, even where the vendor’s customers, rather than the vendor itself, maintain the direct relationship with the individuals from whom the biometric information is collected.
Colorado Attorney General Issues Data Security Guidance
The Colorado Attorney General published guidance on data security best practices. The guidance highlights nine key steps to protecting personally identifiable information, including inventorying the types of data collected and establishing a system for how to store and manage that data, developing a written information security policy, adopting a written data incident response plan, managing the security of vendors, and following the Colorado Department of Law’s ransomware guidance. Notably, the guidance recommends that an entity’s written information security policy follow industry-accepted information security standards relevant to the type of information the entity seeks to protect (e.g., PCI-DSS, ISO/IEC 27000, CIS controls, etc.), which tracks the growing consensus among regulators regarding adherence to industry accepted standards as the requisite standard of care for data protection under state and federal data security laws.
BBB National Programs Digital Advertising Accountability Program Announces Compliance Warning Regarding Device Fingerprinting
The BBB National Programs Digital Advertising Accountability Program (“DAAP”) DAAP issued a new compliance warning about the use of device fingerprints in connection with the collection of cross-app data. DAAP is a program that enforces industry self-regulation principles for data privacy in websites and mobile advertising. Companies are now on notice that DAAP will treat any combined information used to uniquely identify a device or a user for internet-based advertising (“IBA”) as the same as an advertising ID in evaluating if a company is collecting or using cross-app data. Under the DAA Principles, cross-app data is data collected from a particular device regarding application use over time. If a company collects this type of data and uses it for IBA, or allows another entity to do so, that company may need to provide notice, enhanced notice, or consent to the user.
Texas Attorney General Brings Enforcement Action against Meta for Biometric Data Collection
The Texas Attorney General brought a lawsuit against Meta (formerly Facebook) over the use of biometric data of Texans without their consent to do so. The Texas Attorney General alleges Meta has been storing biometric identifiers (such as retina scans, fingerprints, voiceprints, records of hand or face geometry) from photos and videos uploaded by consumers without their consent and in violation of Texas’ Capture or Use of Biometric Identifier Act and the Deceptive Trade Practices Act.
New York Attorney General Fines Vision Benefits Company for Failure to Comply with State Data Security Law
The New York Attorney General announced an agreement with vision benefits company EyeMed resulting in a $600,000 fine stemming from a 2020 data breach that affected 2.1 million consumers, including almost 100,000 New York residents. The New York Attorney General found that EyeMed violated New York’s Stop Hacks and Improve Electronic Data Security Act (“SHIELD Act”), which requires businesses to maintain a data security program that includes a number of specific administrative, physical, and technical safeguards. Specifically, the New York Attorney General found EyeMed had failed to implement multifactor authentication for a compromised e-mail account that was accessible via the web and contained a large volume of sensitive information, failed to implement sufficient password management, and failed to maintain adequate logging, which hampered investigation of the incident. In addition to the fine, EyeMed agreed to enact a number of measures to improve its information security program and bring it in line with SHIELD Act requirements.
INTERNATIONAL LAWS & REGULATIONS
CNIL Rules Use of U.S. Website Analytics Tool Violates the GDPR
The French data protection authority, the Commission Nationale de l’Informatique et des Libertés (“CNIL”) ruled that the transfer of personal data of EU residents through the use of a U.S. website analytics tool violated the General Data Protection Regulation’s (“GDPR) cross-border transfer requirements. The CNIL ruled that the additional measures taken by the U.S. website analytics service provider to regulate its website analytics tool’s data transfers were insufficient to protect EU personal data from being accessed by U.S. intelligence services. In its press release, the CNIL has recommended website analytics tools only be used to produce anonymous statistical data. The CNIL’s ruling, which follows a similar ruling by the Austrian data protection authority in January 2022, was made in cooperation with its European counterparts and thus similar decisions from data protection authorities in other EU Member States can be expected.
UK ICO Publishes Data Transfer Documents
The UK Information Commissioner’s Office (“ICO”) published the UK International Data Transfer Agreement (“IDTA”) and an Addendum (“Addendum”) to the European Union’s new Standard Contractual Clauses (“New SCCs”). The IDTA and Addendum replace the old Standard Contractual Clauses (“Old SCCs”) and align UK contractual data transfer mechanisms with the New SCCs and EU requirements following the Court of Justice of the European Union’s Schrems II decision. Contrary to the modular approach of the New SCCs, the IDTA is a single agreement that applies regardless of the role of the parties, with the exception of certain clauses. The Addendum allows entities to use the New SCCs for UK data transfers by adding terms to the New SCCs tailored for UK data transfers. Companies may use the Old SCCs for new agreements until September 21, 2022. Companies will have until March 21, 2024, to migrate all UK data transfers to the IDTA or Addendum.
CNIL Publishes Enforcement Priorities for 2022
The CNIL published a summary of enforcement priorities for the coming year, citing three priority topics. The CNIL named commercial prospecting and data brokers who resell marketing lists, monitoring tools used to monitor employees working remotely, and the use of cloud computing, particularly as it relates to transfers of data outside the EU and data breaches as priorities. The CNIL has been a particularly active EU data protection authority, issuing several notable enforcement decisions relating to cross-border data transfer and obtaining consent of individuals to the placement of cookies on end user devices and browsers.
European Commission Proposes Data Act
The European Commission (the “Commission”) proposed the Data Act, which aims to give users of connected devices access to the data generated by them and would require manufacturers to share data with third parties such as other providers and aftermarket services. The proposed Data Act also sets out general rules applicable to obligations to make data available, requiring any conditions under which data is made available to be fair and nondiscriminatory and that any compensation charged must be reasonable. Compensation set for small and medium-sized enterprises cannot exceed the costs incurred for making the data available. The proposed Data Act may have an enormous impact for companies that manufacture Internet-connected equipment and that have invested significant amounts in data generation and collection. The proposed Data Act will be presented to the European Parliament and Council of Ministers, which will negotiate a final text of the Data Act to be considered by the European Parliament. The process is expected to take 18 months to two years.
PropTech Privacy Primer: Where Your Data Resides & How to Protect It
Wednesday, March 30, 2022
1:00—1:30 p.m. ET
10:00—10:30 a.m. PT
While property owners, property managers, and third parties that leverage property technology (“PropTech”) are enamored by its significant potential to bolster both top and bottom lines, a myriad of compliance and other legal issues arise at the intersection of real estate and digital innovation.
Join us for a 30 minute briefing that will a provide a foundational overview of PropTech privacy issues, including a discussion of what type of information is at risk, where this information “lives,” and how real estate owners and stakeholders can take affirmative steps to safeguard sensitive data.
Jennifer J. Daniels, Partner, Privacy, Security & Data Protection
Sharon R. Klein, Partner and Chair, Privacy, Security & Data Protection
Contact Mitchell Sterling, Senior Director of Business Development, to get more information about the event.
Protecting Trade Secrets & Gaining a Competitive Edge in the Digital Age
Join trusted attorneys from Blank Rome’s dynamic Trade Secrets and Competitive Hiring practice with special guests from our cross-disciplines in Labor & Employment, Antitrust Counseling & Litigation, Privacy, Security & Data Protection, and White Collar Defense & Investigations for a special multi-part webinar series on strategies companies can use to curb the heightened risk of loss of trade secret information, valuable customer relationships, and key employees to the competition while retaining their competitive advantage in the age of digital media and remote work.
High Crimes & Misdemeanors: Litigation & Criminal Enforcement
Tuesday, March 8, 2022
12:00-12:30 p.m. ET
9:00-9:30 a.m. PT
In this session, our panelists will discuss the strategy and techniques involved in civil litigation involving misappropriation of trade secrets and the enforcement of non-compete agreements. They will also explore the potential interplay between civil remedies and criminal referrals involving theft of trade secret information and economic espionage. You will hear from two former Assistant U.S. Attorneys on what the DOJ considers to be serious enough to warrant criminal enforcement and how that may impact civil litigation.
Anthony B. Haller, Partner, Trade Secrets & Competitive Hiring
Joseph G. Poluka, Partner, White Collar Defense & Investigations
Special Guest Speaker
Michael Levy, Former Chief of Computer Crimes Section & Assistant U.S. Attorney (Retired), Eastern District of Pennsylvania
Contact Jennifer Reda via e-mail to get more information about this webinar series.
RECENT PUBLICATIONS & MEDIA COVERAGE
- DOJ Atty Says Cybersecurity Plan Is a Call to Whistleblowers (Law360)
- Texas’ Meta Lawsuit Could Provide State AGs with Biometric Lawsuit Blueprint (Legaltech News)
- Meta’s Facial Recognition Lawsuit Underscores Enforcement Risk (Bloomberg Law)
- Will It Be Goodbye Forever? Navigating Consumer Requests to Delete Personal Data (Cybersecurity Law Report)
- As Biometric Lawsuits Pile Up, Companies Eye Adoption with Care (Bloomberg Law)
- What Banks Need to Know About New Data Breach Notification Requirements (ABA Risk and Compliance)