Today, the California Attorney General announced the first settlement agreement under the California Consumer Privacy Act (“CCPA”).  The Attorney General alleged that online retailer Sephora, Inc. failed to disclose to consumers that it was selling their information and failed to process user requests to opt out of sale via user-enabled global privacy controls.  The Attorney General also alleged that Sephora did not cure these violations within the cure period. 

The meaning of the CCPA’s “sale” definition has been controversial and unclear. The CCPA statute defines the term to require an exchange of personal information for “monetary or other valuable consideration.”  The Attorney General previously declined to clarify whether the term covered various advertising practices in its earlier rulemakings, and the CPRA voted on by the California electorate clarifies that “sales” are distinct from “cross-context behavioral advertising.”  However, the Attorney General’s complaint suggests that Sephora’s relationships with certain ad tech partners met the definition of “sale” “because “Sephora gave companies access to consumer personal information in exchange for free or discounted analytics and advertising benefits. . . . Both the trade of personal information for analytics and the trade of personal information for an advertising option constituted sales under the CCPA.”  However, the complaint also acknowledges that maintaining a valid service provider contract with a vendor is an exception to the “sale” definition.

The complaint also reveals that, in June, the Attorney General conducted “an enforcement sweep of large retailers to determine whether they continued to sell personal information when a consumer signaled an opt-out via the GPC.”  The Attorney General’s press release on the settlement suggests that “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.”  Without recognizing open questions about the GPC and its status under the CPRA, the press release also states, “Technologies like the Global Privacy Control are a game changer for consumers looking to exercise their data privacy rights [and businesses must] process opt-out requests made via user-enabled global privacy controls.”

The settlement requires Sephora to pay $1.2 million in penalties and comply with injunctive terms, including adding a representation that it sells data in its online disclosures and privacy policy, creating mechanisms for consumers to opt out of sale (including via the GPC), editing its service provider agreements to conform with CCPA requirements, and providing reporting to the Attorney General on its compliance with these requirements.

In addition to announcing the Sephora settlement today, the Attorney General also sent notices to a number of businesses alleging non-compliance related to a failure to process consumer opt-out requests made via user-enabled global privacy controls.  The Attorney General also released additional enforcement case examples, including an enforcement sweep of loyalty programs and allegations of noncompliance due to confusing or non-functional CCPA request mechanisms.

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Photo of Sarah Parker Sarah Parker

Sarah Parker is an associate in the firm’s Washington Office. Her practice focuses on privacy, advertising, and consumer protection regulatory matters and government investigations.

Sarah also maintains an active pro bono practice, with a focus on criminal justice and civil rights litigation

Photo of Lindsey Tonsager Lindsey Tonsager

Lindsey Tonsager helps national and multinational clients in a broad range of industries anticipate and effectively evaluate legal and reputational risks under federal and state data privacy and communications laws.

In addition to assisting clients engage strategically with the Federal Trade Commission, the…

Lindsey Tonsager helps national and multinational clients in a broad range of industries anticipate and effectively evaluate legal and reputational risks under federal and state data privacy and communications laws.

In addition to assisting clients engage strategically with the Federal Trade Commission, the U.S. Congress, and other federal and state regulators on a proactive basis, she has experience helping clients respond to informal investigations and enforcement actions, including by self-regulatory bodies such as the Digital Advertising Alliance and Children’s Advertising Review Unit.

Ms. Tonsager’s practice focuses on helping clients launch new products and services that implicate the laws governing the use of endorsements and testimonials in advertising and social media, the collection of personal information from children and students online, behavioral advertising, e-mail marketing, artificial intelligence the processing of “big data” in the Internet of Things, spectrum policy, online accessibility, compulsory copyright licensing, telecommunications and new technologies.

Ms. Tonsager also conducts privacy and data security diligence in complex corporate transactions and negotiates agreements with third-party service providers to ensure that robust protections are in place to avoid unauthorized access, use, or disclosure of customer data and other types of confidential information. She regularly assists clients in developing clear privacy disclosures and policies―including website and mobile app disclosures, terms of use, and internal social media and privacy-by-design programs.

Photo of Libbie Canter Libbie Canter

Libbie Canter represents a wide variety of multinational companies on privacy, cyber security, and technology transaction issues, including helping clients with their most complex privacy challenges and the development of governance frameworks and processes to comply with global privacy laws. She routinely supports…

Libbie Canter represents a wide variety of multinational companies on privacy, cyber security, and technology transaction issues, including helping clients with their most complex privacy challenges and the development of governance frameworks and processes to comply with global privacy laws. She routinely supports clients on their efforts to launch new products and services involving emerging technologies, and she has assisted dozens of clients with their efforts to prepare for and comply with federal and state privacy laws, including the California Consumer Privacy Act and California Privacy Rights Act.

Libbie represents clients across industries, but she also has deep expertise in advising clients in highly-regulated sectors, including financial services and digital health companies. She counsels these companies — and their technology and advertising partners — on how to address legacy regulatory issues and the cutting edge issues that have emerged with industry innovations and data collaborations.

Photo of Jayne Ponder Jayne Ponder

Jayne Ponder is an associate in the firm’s Washington, DC office and a member of the Data Privacy and Cybersecurity Practice Group. Jayne’s practice focuses on a broad range of privacy, data security, and technology issues. She provides ongoing privacy and data protection…

Jayne Ponder is an associate in the firm’s Washington, DC office and a member of the Data Privacy and Cybersecurity Practice Group. Jayne’s practice focuses on a broad range of privacy, data security, and technology issues. She provides ongoing privacy and data protection counsel to companies, including on topics related to privacy policies and data practices, the California Consumer Privacy Act, and cyber and data security incident response and preparedness.