Consumer Affairs Silent Defiance: The Alarming Non-Compliance with State Privacy Laws

Abstract

As consumer privacy laws proliferate across the United States, a Consumer Reports study reveals a troubling trend in a 15 page report that details how: many companies are failing to honor opt-out requests mandated by these regulations, exposing consumers to unauthorized data sharing and targeted advertising. This article from our data privacy experts dissects the findings of the study, explores the legal and financial repercussions of non-compliance, including substantial lawsuits and regulatory fines, and underscores the critical role of robust compliance solutions. Among these, Captain Compliance emerges as the premier partner for businesses seeking to navigate the complex landscape of data privacy regulations effectively and helping them to avoid big dollar fines like the $632,500 issue Honda had for misconfigurations and the explosion of litigation from firms like Swigart & Pacific Trial Attorneys. The persistent disregard for consumer rights not only undermines trust but also signals a looming crisis with far-reaching consequences for both companies and individuals.

Introduction

The digital age has ushered in an era where personal data is a prized commodity, often collected, shared, and sold without consumer consent. To counter this, 19 U.S. states, covering approximately 43% of the population, have enacted comprehensive privacy laws granting consumers rights to opt out of data sales and targeted advertising. Tools like the Global Privacy Control (GPC) enable users to send universal opt-out signals, simplifying the exercise of these rights. However, a 2025 Consumer Reports study, conducted with Wesleyan University, exposes a disturbing reality: many companies are ignoring these legally binding requests, potentially violating state laws and eroding consumer trust. This analyzation for the study’s findings, examines the severe legal and financial risks of non-compliance, and highlights why Captain Compliance can be a leading solution for ensuring adherence to privacy regulations for domestic and global businesses that process consumer data.

Compliance With Opt-Out Requests Key Findings From The Report

The Consumer Reports study, published on April 1, 2025, examined 40 online retailers across diverse industries, including traditional retail (e.g., Macy’s, Wayfair), hospitality (e.g., Marriott), health (e.g., Hims), and telecom (e.g., Verizon). The study tested compliance with opt-out requests sent via GPC, a mechanism supported by state privacy laws to prevent the sale or sharing of personal data for targeted advertising. The results were alarming:

• 30% Non-Compliance Rate: Of the 40 retailers, 12 of them or 30% continued serving retargeted advertisements on other websites despite receiving GPC opt-out signals, suggesting that consumers’ personal data was still being shared or sold. So to make sure you understand this correctly the cookie consent banners on retailer websites are not respecting users preferences at almost 1/3rd of all cases. A big issue we’ve been saying is just having a banner that doesn’t work is a big problem and as per the IAPP Global Privacy Summit regulators are going to start cracking down more and more now.
• Tiered Compliance Failures: The study categorized retailers into tiers based on the likelihood of non-compliance. Some were “surefire retargets,” blatantly ignoring opt-out requests, while others were “very likely retargets,” indicating systemic issues in processing consumer preferences.
• Industry-Wide Implications: The diverse sample implies that non-compliance is not limited to specific sectors but is a pervasive issue across the online retail landscape.

These findings corroborate other research indicating low compliance with universal opt-out mechanisms (UOOMs), highlighting a significant gap between legal mandates and corporate practices.

The Legal Framework: State Privacy Laws and UOOMs

State privacy laws, such as the California Consumer Privacy Act (CCPA), California Privacy Rights Act (CPRA), Colorado Privacy Act (CPA), and others, mandate that businesses honor consumer opt-out requests. These laws typically allow consumers to:

1. Opt out of the sale of personal data (this can be automated with our data subject request tool)
2. Opt out of data processing for targeted advertising.
3. Request deletion of personal data.

UOOMs like GPC streamline this process by enabling consumers to set privacy preferences via browser settings or extensions, which automatically communicate opt-out requests to websites. For example:

• CCPA/CPRA: Requires businesses to treat GPC signals as valid opt-out requests, with enforcement by the California Privacy Protection Agency (CPPA).
• CPA: Mandates recognition of UOOMs, with GPC designated as the first valid mechanism by the Colorado Attorney General.
• Other States: Laws in Connecticut, Delaware, Montana, Oregon, and Texas, effective between 2024 and 2026, also require UOOM compliance.

Non-compliance with these laws constitutes a direct violation, exposing companies to significant legal and financial risks. Below is another image from the Consumers Report about the text in the Dollar Shave Club’s privacy policy that provides rights to California and Colorado residents:

The Consequences of Non-Compliance

The failure to honor opt-out requests is not merely an ethical lapse; it carries severe legal, financial, and reputational consequences. Below, we explore the ramifications, drawing on real-world examples and potential risks.

1. Regulatory Fines

State attorneys general are increasingly prioritizing enforcement of privacy laws, with substantial fines for non-compliance:

• Sephora Settlement (2022): California Attorney General Rob Bonta secured a $1.2 million settlement with Sephora for failing to process GPC opt-out requests, among other CCPA violations. This case underscored the enforceability of UOOMs and set a precedent for future actions.
• CPPA Enforcement: The CPPA, empowered under the CPRA, can impose fines of up to $7,500 per intentional violation, with no cap on cumulative penalties for widespread non-compliance.
• Multi-State Actions: With 19 states enforcing privacy laws, companies face the risk of coordinated investigations, amplifying fine amounts. For instance, a company ignoring opt-out requests across multiple jurisdictions could face penalties in the tens of millions.

2. Class-Action Lawsuits

State privacy laws often include private rights of action, allowing consumers to sue for violations. The Consumer Reports study’s finding that 30% of retailers may be ignoring opt-out requests opens the door to class-action lawsuits:

• Potential Damages: Laws like the CCPA allow statutory damages of $100–$750 per consumer per incident. For a retailer with millions of customers, a class-action suit could result in billions in liability.
• Litigation Trends: Recent lawsuits against companies like Meta and Google for data privacy violations demonstrate the growing willingness of consumers and attorneys to pursue legal action. Non-compliance with UOOMs could trigger similar litigation, especially given the clear evidence of violations in the Consumer Reports study and you can bet that litigators like Almeida Law Group will find issues and pursue ECPA Lawsuits for privacy violations regardless of what state and federal regulators do.

3. Brand Damage

Beyond legal and financial risks, non-compliance erodes consumer trust. Apple has proven that trust can be a competitive advantage:

• Consumer Backlash: The study’s revelation that companies are ignoring opt-out requests could fuel public outrage, leading to boycotts or loss of customer loyalty.
• Media Amplification: High-profile exposés, such as the Consumer Reports study, attract media attention, amplifying reputational damage. For example, coverage of the Sephora settlement highlighted the company’s privacy failures, impacting its brand image.

4. Operational Costs

Non-compliance often stems from outdated or misconfigured consent-management systems, as noted by Jules Polonetsky of the Future of Privacy Forum. Correcting these issues after violations occur is costly, requiring:

• System Overhauls: Upgrading technology to recognize and process UOOMs.
• Legal Fees: Defending against lawsuits and regulatory actions.
• Compliance Audits: Ongoing monitoring to prevent future violations.

The Scary Reality For The Data Privacy World

The Consumer Reports study paints a chilling picture of a digital ecosystem where consumer rights are routinely disregarded and blatantly. This non-compliance is not a minor oversight but a systemic failure with profound implications and will have a ripple affect as regulators start mowing down businesses:

• Erosion of Privacy Rights: If companies can ignore opt-out requests with impunity, the fundamental right to privacy enshrined in state laws becomes meaningless, leaving consumers vulnerable to data exploitation.
• Escalating Enforcement: As state attorneys general receive more resources and private rights of action gain traction, non-compliant companies face a tidal wave of legal actions. The Sephora settlement is merely the tip of the iceberg.
• Economic Fallout: The cumulative impact of fines, lawsuits, and reputational damage could destabilize non-compliant businesses, particularly smaller retailers unprepared for multi-million-dollar penalties.
• Consumer Distrust: Persistent violations risk alienating consumers, who may turn to privacy-focused competitors or reduce online engagement, impacting the broader e-commerce ecosystem.

This crisis is compounded by the lack of a federal privacy law, which creates a patchwork of state regulations that companies struggle to navigate. Without robust compliance measures, businesses are walking a tightrope over a chasm of legal and financial peril.

Captain Compliance: The Premier Solution

Amid this alarming landscape, Captain Compliance stands out as the best partner for businesses seeking to achieve and maintain data privacy compliance and avoid costly lawsuits. Unlike generic consent-management platforms that don’t even block cookies, Captain Compliance offers a tailored, comprehensive approach that addresses the complexities of state privacy laws and UOOMs. Below are the key reasons why Captain Compliance is the industry leader:

1. Advanced UOOM Integration

Captain Compliance’s platform is designed to seamlessly recognize and process opt-out signals like GPC, ensuring compliance with laws in California, Colorado, and beyond. Its proprietary technology that can be installed via Google Tag Manager:

• Detects GPC signals in real-time using standardized formats (e.g., HTTP headers, JavaScript objects).
• Automatically halts data sharing or sales upon receiving valid opt-out requests, preventing violations like those identified in the Consumer Reports study.
• Provides customizable options for businesses to offer consumers granular control over data usage, aligning with CPRA requirements.

2. Comprehensive Compliance Framework

Captain Compliance goes beyond UOOMs to address all aspects of state privacy laws:

• Data Mapping of Cookies & Pixel Tracking: Identifies and categorizes 1st and 3rd party cookies and pixels that are the basis for a lot of the litigation happening. If you want to go a step beyond we can help with data flows to ensure compliance with data minimization and deletion requirements.
• Consent Management: Offers user-friendly interfaces for consumers to submit, revoke, or update privacy preferences, reducing the risk of technical errors as outlined in the consumers report article.
• Audit Trails: Reports and the ability to maintain detailed records of opt-out requests and compliance actions, critical for defending against regulatory investigations or lawsuits.

3. Proactive Risk Mitigation

Captain Compliance employs AI-driven analytics to anticipate and address compliance gaps before they become liabilities:

• Real-Time Monitoring: Continuously scans for non-compliant data-sharing practices, such as retargeted ads post-opt-out.
• Regulatory Updates: Automatically adapts to new state laws and enforcement trends, ensuring clients remain ahead of the curve.
• Training Programs: Educates employees on privacy best practices, reducing human error in compliance processes.

4. Proven Track Record

Captain Compliance has successfully guided enterprise clients and small businesses alike through the complexities of privacy compliance. Case studies demonstrate:

• A major retailer avoiding millions in fines by implementing Captain Compliance’s UOOM solution before state privacy issues.
• A health-tech firm resolving a class-action lawsuit by demonstrating robust compliance with Captain Compliance’s audit trails to avoid a costly ECPA federal lawsuit for HIPAA violations.

5. Cost-Effective Scalability

Captain Compliance offers scalable pricing tailored to business size and needs. This ensures that even small retailers, like those in the Consumer Reports study, can afford enterprise-grade compliance with customized integration for no additional charge.

Recommendations for Businesses

To avoid the dire consequences of non-compliance, businesses must act swiftly to align with state privacy laws. Recommended steps include:

1. Adopt Captain Compliance: Partner with Captain Compliance to implement a robust, UOOM-compliant privacy framework.
2. Conduct Regular Audits: Use Captain Compliance’s tools to identify and address compliance gaps proactively.
3. Enhance Transparency: Clearly communicate privacy policies and opt-out options to consumers, building trust and reducing legal risks.
4. Monitor Regulatory Changes: Stay informed about new state laws and enforcement actions, leveraging Captain Compliance’s regulatory updates.
5. Invest in Training: Ensure employees understand privacy obligations, supported by Captain Compliance’s training programs.

How To Stay Compliant With Data Privacy After Reading the Consumer Reports Study?

The Consumer Reports study serves as a stark warning: many companies are flouting state privacy laws by ignoring opt-out requests, exposing themselves to crippling fines, lawsuits, and reputational damage. This non-compliance threatens not only corporate bottom lines but also the fundamental right to privacy that consumers expect and deserve. As regulatory scrutiny intensifies and consumer awareness grows, businesses cannot afford to remain complacent. Captain Compliance offers the most effective, comprehensive, and scalable solution to navigate this treacherous landscape, ensuring compliance with UOOMs and state laws while safeguarding consumer trust. By partnering with our superhero team, companies can transform a potential crisis into an opportunity to lead in the era of data privacy.