July 27, 2021 by Kate Kaye
“Why would I care about cookies?”
The question was one privacy lawyer Odia Kagan heard from a client back before January 2020 when California’s privacy law went into effect, and companies engaged in cookie tracking thought there might be more wiggle room with the law. Back then, said Kagan, who serves as chair of the GDPR compliance and international privacy practice group at Fox Rothschild, it wasn’t clear whether or not cookies or trackers were going to be an enforcement priority in California.
Now, as enforcement letters stream out to advertisers, social media sites, data brokers and ad tech firms from the California Attorney General’s office, it is clear that California Consumer Privacy Act enforcement is not just about data breaches. It’s about cookies and tracking technologies — including analytics trackers. And the penalties for violations could be steep.
These recent signals from the AG are “kind of narrowing down the gray area that some people were assuming,” said Kagan.
In addition to indicators from specific enforcement letters, lawyers are reading the tea leaves left in a series of generic CCPA case examples the agency published on July 19 which show evidence of enforcement around tracking for analytics purposes and opt-out notices.
Analytics trackers are “definitely something to pay attention to”
This sign that data sharing via analytics trackers could constitute a data sale “is definitely something to pay attention to [because] this is something that the AG is looking at,” said Kagan.
Lee said there are a variety of factors the AG might take into consideration when assessing compliance when it comes to analytics trackers — such as which entities are involved in data flows, what analytics trackers are used for and whether they are tracking people across multiple sites or offline. “There is a lot of nuance in how these tools work, so it’s hard to create a bright line rule,” she said.
A separate violation for each cookie could add up
Much of the enforcement activity thus far revolves around so-called notice-to-cure letters which serve as fact-finders and warning notices to companies, asking for information and giving them a 30-day period during which they can work directly with the agency to make fixes that bring them into compliance with the law. But if companies using cookies and other trackers for ads or analytics fail to make necessary changes and are found in violation, the penalties could cost companies using tens of trackers a great deal, said one privacy lawyer who asked not to be named.
The state could charge companies for each individual instance of a cookie-related violation; for instance, it could charge for each time a California resident interacts with a website without proper notice or opt-out capabilities, said the lawyer, adding, “In cases like these, the number of violations may be large.” A big tally of violations can add up to high civil penalties. When violations are found to be unintentional, each one could result in a $2,500 fine. If found to be intentional, that fine soars to $7,500 for each violation.
“There is room for that interpretation in the statute, but I don’t know how the AG plans to calculate a ‘violation,’” said Jessica Lee, partner and co-chair of the privacy, security and data innovation practice group at law firm Loeb and Loeb.
The threat of counting each time a cookie is used as its own separate violation is probably more of a tactical means of incentivizing compliance than an actual plan for calculating penalties, said Alysa Hutnik, partner and chair of the privacy and security practice at law firm Kelley Drye and Warren.
She said it is “unlikely” that penalties would be assessed that way. However, she said California’s Department of Justice has “a fair amount of flexibility” in how it might tabulate penalties; for instance, it could base them on the number of days a company is non-compliant, or according to an amount of data records affected, she said.