As far back as 2017, it was estimated that the world was producing some 2.5 quintillion bytes of data each day. Fueled by the explosion of internet use and the digitisation of all aspects of modern life (think mobile phones, key cards, credit cards, television streaming services etc.) in the early 2000s, this figure continues to grow at a rapid pace. In an effort to address this change, the landscape of privacy laws in the USA has become significantly more complex. The digital transformation of industry and society in general has necessitated more robust data protection measures. Businesses and organizations are under greater pressure than ever to demonstrate that they are compliant with a patchwork of state, federal, and even international privacy regulations.
Privacy legislation at the federal level
The USA has a number of sector-specific privacy laws at the federal level as opposed to a comprehensive framework for data protection. The principal federal regulations are:
- The Health Insurance Portability and Accountability Act (HIPAA): This act standardizes health care transactions in order to make the American healthcare system more efficient.
- The Gramm-Leach-Bliley Act (GLBA): This act serves to safeguard financial information.
- The Children’s Online Privacy Protection Act (COPPA): COPPA regulates the gathering of personal data relating to children under 13 years of age.
It is important to realize that unlike the European Union’s General Data Protection Regulation, although these laws set important precedents, they address specific types of data as opposed to imposing a universal standard. The lack of a comprehensive federal privacy law of the European model has resulted in the emergence of various state-level regulations, making things increasingly complex.
Privacy laws at the state level
To address growing privacy concerns and the lack of action by the federal government, individual states have begun enacting their own privacy laws. At the forefront of this movement has been California where the California Consumer Privacy Act (CCPA) of 2018 and its successor, the California Privacy Rights Act (CPRA), which fully took effect in 2023. These acts grant residents of California extensive rights over their personal data. This includes the right to know, delete, and opt-out of the sale of their personal information.
In the wake of the California Act, other states have passed their own legislation, such as:
- Virginia’s Consumer Data Protection Act (CDPA): Generally viewed as being similar to the California legislation but with significant differences in scope and enforcement.
- Colorado Privacy Act (CPA): In effect since 2023, the CPA provides broad consumer rights and places strict obligations regarding data processing.
Respective state laws come with their own requirements and definitions, thus creating a fragmented legal landscape across the United states. This is proving to be a significant challenge for businesses which operate across multiple jurisdictions.
New challenges and trends
With more states hastening to introduce their own privacy legislation, a number of trends and challenges have presented themselves:
- Inconsistencies between the states: Different states requiring different things can obviously lead to confusion and compliance difficulties. For example, the very definition of “personal data” is not universal. Other disparities include the required response times for consumer requests.
- Enforcement & penalties: Different approaches to enforcement are being adopted by the various states. In the case of California a dedicated agency for privacy enforcement has been established, whereas other states rely on their attorneys general.
- The effect of technology: Swift advancements in technology, e.g. artificial intelligence and big data analytics, are introducing novel privacy concerns that existing laws do not fully address. Data handling organizations must stay up to date with such developments to ensure compliance.
- Expectations of the consumer: Public awareness of privacy issues is increasing. This means that consumers are now much more vigilant and demanding about how their personal data is handled. Transparency and proactivity in privacy practices is essential if trust is to be maintained and reputational damage avoided.
An American ‘GDPR’ on the horizon?
The current fragmentation and complexity of state privacy laws in the USA have emboldened calls for comprehensive federal legislation. A national standard could provide clarity and consistency for both businesses and consumers. Nonetheless, reaching bipartisan consensus on the details of such a law remains an obstacle.
A federal privacy law would have to address the following issues:
- Preemption of state legislation: ‘Preemption’ means the invalidation of one jurisdiction’s law by the law of a higher jurisdiction, in this case whether a proposed federal privacy law would override all state laws, or alternatively would individual allow states to maintain stricter standards if they so wished.
- Scope & definitions: A clarification of the definition of ‘personal data’, and an outline of the basic rights to be afforded to consumers.
- Mechanisms of enforcement: The establishment of a federal agency or perhaps expanding the functions of an existing one, e.g. the Federal Trade Commission (FTC), to be responsible for enforcement.
Navigation of the privacy landscape
The present complexities mean that businesses must adopt a proactive approach when it comes to privacy compliance. Some strategies to be considered:
- Remain informed: Routine monitoring of legislative developments at both the state and federal levels is essential. Engagement with industry groups and legal specialists can also provide valuable insights.
- Inventory and mapping of data: Thorough audits of data collection, storage, and processing practices should be undertaken at regular intervals. Good comprehension of where and how data is utilized can help identify potential compliance gaps.
- Privacy by Design: Privacy considerations should be integrated into every aspect of business operations, from product development to marketing.
- Staff training: All employees should be made fully aware of their roles in protecting personal data and given the relevant training to do so.
- Communication with Consumers: Clear and accessible privacy policies need to be developed. Consumers value transparency; it builds trust and can facilitate compliance with legislation.
The rapidly increasing complexity of privacy laws in the United States poses serious challenges for businesses and organizations. Navigation of this evolving landscape necessitates a thorough comprehension of both state and federal regulations, proactive compliance strategies, and a commitment to the protection of consumer privacy. Businesses which stay informed and adopt best practices, can not only remain compliant, but may also build trust and encourage long-term customer loyalty in an age in which the public is increasingly privacy-conscious.
Photo Credit: Ahtesham / stock.adobe
